The easiest way to tackle this interesting problem is to first convert all interest rates from continuous compound to monthly compound as follows:
3% comp. cont.=3.00375312695 comp. monthly.
4% ,,,,,,,,,,,,,,,,,, =4.00667408025 ,,,,,,,,,,,,,,,,,,,,,,,,,
5%,,,,,,,,,,,,,,,,,,,,=5.01043114934,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Next, we project the FV of the $1,000,0000 for the next 10 years at the above rates using this common TVM formula:FV=PV[1 + R]^N. After we do that for the above 3 terms and their respective interest rates, we get this FV for the $1,000,000=$1,521,961.56. From these two amounts and using the above TVM formula, we can easily find the averaged interest rate. We find that it comes to=4.20735858258 comp. monthly, which is equivalent to effective annual rate of=4.29%.
Now, will use this common TVM formula to find the monthly payment of the dealership:PMT=PV. R.{[1 + R]^N/ [1 + R]^N - 1}=PMT NEEDED TO PAY OFF A LOAN OF $1.
When we plug all the numbers into this formula, we find that the even monthly payments comes to=$10,223.36. And that is it.