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You are shopping for a car and read the following advertisement in the newspaper: "Own a new car. No money down. Four annual payments of just $10,000." You have shopped around and know that you can buy the car for cash for $32,500. What is the interest rate the dealer is advertising (what is the IRR of the loan in the advertisement)? Assume that you must make the annual payments at the end of the year.

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  • Bsc, Madras University
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