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a) Determine the APR of the installment loan. APR= % b) How much interest will Ray save by paying off the loan early? (Use the

a) Determine the APR of the installment loan. APR= % b) How much interest will Ray save by paying off the loan early? (Use the

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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a) Determine the APR of the installment loan. APR= % b) How much interest will Ray save by paying off the loan early? (Use the actuarial method) Interest saved=$ (Round to the nearest cent.) c) What is the total amount due to pay off the loan? (Round to the nearest cent.) The total amount due = $
Transcribed Image Text:a) Determine the APR of the installment loan. APR= % b) How much interest will Ray save by paying off the loan early? (Use the actuarial method) Interest saved=$ (Round to the nearest cent.) c) What is the total amount due to pay off the loan? (Round to the nearest cent.) The total amount due = $
Ray Flagg took out a 60-month fixed installment loan of $12,000 to open a new pet store. He paid no money down and began making monthly payments of $232. Ray's business does better than expected and instead of making his 30th payment, Ray wishes to repay his loan in full. Complete parts a) through c). Click the icon to view the table of interest rates. table of interest rates Number of 3.0% Payments 24 30 36 48 60 Annual Percentage Rate 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% (Finance charge per $100 of amount financed) 6.37 7.94 8.61 6.91 7.45 5.29 5.83 4.22 4.75 7.26 6.59 5.92 5.25 7.90 8.71 7.09 9.30 6.29 9.52 10.34 11.16 8.38 9.46 10.54 11.63 12.73 13.83 14.94 10.50 11.86 13.23 14.61 16.00 17.40 18.81 3.15 3.69 3.92 4.58 4.69 6.24 7.81 5.49 7.31 9.15 ... Print Done - X
Transcribed Image Text:Ray Flagg took out a 60-month fixed installment loan of $12,000 to open a new pet store. He paid no money down and began making monthly payments of $232. Ray's business does better than expected and instead of making his 30th payment, Ray wishes to repay his loan in full. Complete parts a) through c). Click the icon to view the table of interest rates. table of interest rates Number of 3.0% Payments 24 30 36 48 60 Annual Percentage Rate 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% (Finance charge per $100 of amount financed) 6.37 7.94 8.61 6.91 7.45 5.29 5.83 4.22 4.75 7.26 6.59 5.92 5.25 7.90 8.71 7.09 9.30 6.29 9.52 10.34 11.16 8.38 9.46 10.54 11.63 12.73 13.83 14.94 10.50 11.86 13.23 14.61 16.00 17.40 18.81 3.15 3.69 3.92 4.58 4.69 6.24 7.81 5.49 7.31 9.15 ... Print Done - X
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