You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round dollars to the nearest cent.)### Loan Details Table:- **Amount Financed**: $4,700- **Number of Payments**: 36- **Monthly Payment**: $165.33- **Payments Made**: 33- **Rebate Fraction**: ___- **Finance Charge Rebate**: $___- **Loan Payoff**: $___ The table outlines the parameters of the loan, requiring calculation of the rebate fraction, the finance charge rebate, and the adjusted loan payoff due to early payment.

Answered: are the loan department supervisor ban…

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

See similar textbooks

Related questions

Question

You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round dollars to the nearest cent.)

### Loan Details Table:

- **Amount Financed**: $4,700
- **Number of Payments**: 36
- **Monthly Payment**: $165.33
- **Payments Made**: 33
- **Rebate Fraction**: ___
- **Finance Charge Rebate**: $___
- **Loan Payoff**: $___

The table outlines the parameters of the loan, requiring calculation of the rebate fraction, the finance charge rebate, and the adjusted loan payoff due to early payment.

Expert Solution

Step 1

Given information :

Amount financed = $4,700

Number of payments = 36

Monthly payment = $165.33

Payments made = 33

Step 2

The rebate fraction can be calculated as follows :

$= \frac{S u m o f t h e d i g i t s o f t h e n u m b e r o f p a y m e n t s r e m a i n i n g a t t h e l a o n p a y o f f t i m e}{S u m o f t h e d i g i t s o f t h e t o t a l n u m b e r o f p a y m e n t s o f t h e l o a n} C a l c u l a t i n g n u m e r a t o r : N u m b e r o f p a y m e n t s r e m a i n i n g = 36 - 33 = 3 S u m o f t h e d i g i t s = \frac{3 (3 + 1)}{2} = 6 C a l c u l a t i n g d e n o m i n a t o r : S u m o f t h e d i g i t s = \frac{36 (36 + 1)}{2} = 666 T h u s, R e b a t e f r a c t i o n = \frac{6}{666} = 0.009$

Step 3

The finance charge rebate can be calculated as follows :

$F i n a n c e c h a r g e r e b a t e = R e b a t e f r a c t i o n \times T o t a l f i n a n c e c h a r g e W h e r e, T o t a l f i n a n c e c h a r g e = (M o n t h l y p a y m e n t \times N u m b e r o f p a y m e n t s) - A m o u n t f i n a n c e d T o t a l f i n a n c e c h a r g e = ($ 165.33 \times 36) - $ 4700 = $ 1251.88 T h e r e f o r e, F i n a n c e c h a r g e r e b a t e = \frac{6}{666} \times $ 1251.88 = $ 11.2782$

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS