You want to expand your garage. A contractor, who was highly recommended, says that he will do the whole job (new roof, automatic garage door, insulation and more) for $55,000. He offers you two choices:
1) You can pay the $55,000 cash, now.
2) You can make $11,000 down payment now, and pay $1200 each month for four years.
Questions:
A. At what monthly bank interest rate would the two choices be equivalent?
B. What is the nominal annual rate?