Use the Information for the Question(s)below

question 3

Multiple Choice

Use the information for the question(s) below.
Your firm needs to invest in a new delivery truck.The life expectancy of the delivery truck is five years.You can purchase a new delivery truck for an upfront cost of $200,000,or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4000 (paid at the end of each month) .Your firm can borrow at 6% APR with quarterly compounding.
-The effective annual rate for a certificate of deposit that pays 3.9% APR compounded monthly is closest to:

• A)3.83%.
• B)3.90%.
• C)3.97%.
• D)4.04%.

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