Honest John's Car Dealership advertises his "understandable" financing plan on car purchases as follows. You pay 10% of the car's full price up front and 4% of the car's full price in 30 equal end-of-month payments For instance, if a car cost $15,000, the upfront payment (down payment) would be 10% * $15,000 = $1,500, and the equal monthly payments would be 4% * $15,000 = $600 a month for 30 months. It would work similarly for other car prices
a. What is the EAR for Honest John's loans?
b. Honest John offers an alternative of making 120 weekly payments of 1% of the car's full price. Everything else stays the same. What is the EAR for this loan option?