Claudia owns a 6 year old jeep . She wants to determine the Future Worth of the maintenance and repair bills over the next 4 years she expects to drive the vehicle . She brings her vehicle in for maintenance four times per year and expects the first visit (after 3 months = 1 visit) to cost $ 300 with an increase of $ 50 with each subsequent visit . If we assume quarterly compounding , and a nominal interest rate of 12 % , what is the future value of the repair costs ? Round your answer to the nearest dolla

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A: Part (a): Answer: Annual effective rate of interest is 6.14%

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A: Please see the next step for the solution

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A:

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A: Excel Spreadsheet: Excel Workings:

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.