Question: Why they use EMR? And when do you use it? General Appliances (GA) offers you the follo wing financing terms for a new washer and

Why they use EMR? And when do you use it?

General Appliances (GA) offers you the follo wing financing terms for a new washer and dryer with a price tag of $2,489: You make a down payment of $250 now and 36 consecutive monthly installments of $75 (the first payment is due in one month). What is the effective annual interest rate (EAR) implied in GA's financing option? Note: To solve this problem use, for example, Goal Seek in Excel. PV = $2.489-$250-$2,239. Using the annuity formula: 75 $2,239 = EMR 11 (1 + EMR)361 Using the "Goal Seek" function in Excel, EMR 0.0105 EAR = (1 + 0.0105)12-1 = 13.35%

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