Mail Solicitation Home Equity Loan: Is This a Good Deal? Discover offers a home equity line of credit that lowers the total of the monthly payments on several hypothetical loans by $367.32. (See the following table.) The home equity loan payment is based on "10.43% APR annualized over a 10-year term." This means that the loan is amortized at 10.43% with monthly payments. Table 1t Question 1 Current Monthly Payment Example Discover Home Equity Loan Type Loan Amount Monthly Payment Loan Amount Monthly Payment Bank cards $10,000 $186.00 PAID OFF NONE Auto loan $12,500 $320.03 PAID OFF NONE Department $2,500 $78.58 PAID OFF NONE store cards Discover home equity line of $25,000 $217.29 credit Total $25,000 $584.61 $25,000 $217.29 Using this interest rate and monthly payments for the 10 years, how much money will still be owed at the end of the 10 years? (Round to the nearest cent.) $28763.18 X Question 2 Question 3 How much would the payment have to be for the debt to be paid in the 10 years? (Round to the nearest cent.) Monthly payment = $ Question 4 How many months would it take to pay off the debts under the original plan if interest were 15% on each loan? (Recall that each of the original loans had an individual monthly payment. Round your answer up to the nearest whole number.) months 182
Mail Solicitation Home Equity Loan: Is This a Good Deal? Discover offers a home equity line of credit that lowers the total of the monthly payments on several hypothetical loans by $367.32. (See the following table.) The home equity loan payment is based on "10.43% APR annualized over a 10-year term." This means that the loan is amortized at 10.43% with monthly payments. Table 1t Question 1 Current Monthly Payment Example Discover Home Equity Loan Type Loan Amount Monthly Payment Loan Amount Monthly Payment Bank cards $10,000 $186.00 PAID OFF NONE Auto loan $12,500 $320.03 PAID OFF NONE Department $2,500 $78.58 PAID OFF NONE store cards Discover home equity line of $25,000 $217.29 credit Total $25,000 $584.61 $25,000 $217.29 Using this interest rate and monthly payments for the 10 years, how much money will still be owed at the end of the 10 years? (Round to the nearest cent.) $28763.18 X Question 2 Question 3 How much would the payment have to be for the debt to be paid in the 10 years? (Round to the nearest cent.) Monthly payment = $ Question 4 How many months would it take to pay off the debts under the original plan if interest were 15% on each loan? (Recall that each of the original loans had an individual monthly payment. Round your answer up to the nearest whole number.) months 182
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter7: Using Consumer Loans
Section: Chapter Questions
Problem 7FPE: Calculating interest and APR of installment loan. Assuming that interest is the only finance charge,...
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Question
Transcribed Image Text:Mail Solicitation Home Equity Loan: Is This a Good Deal?
Discover offers a home equity line of credit that lowers the total of the monthly payments on several hypothetical loans by $367.32. (See the following table.)
The home equity loan payment is based on "10.43% APR annualized over a 10-year term." This means that the loan is amortized at 10.43% with monthly payments.
Table 1t
Question 1
Current Monthly
Payment Example
Discover Home
Equity
Loan Type
Loan
Amount
Monthly
Payment
Loan
Amount
Monthly
Payment
Bank cards
$10,000
$186.00
PAID OFF
NONE
Auto loan
$12,500
$320.03
PAID OFF
NONE
Department
$2,500
$78.58
PAID OFF
NONE
store cards
Discover home
equity line of
$25,000
$217.29
credit
Total
$25,000
$584.61
$25,000
$217.29
Using this interest rate and monthly payments for the 10 years, how much money will still be owed at the end of the 10 years? (Round to the nearest cent.)
$28763.18 X
Question 2
Question 3
How much would the payment have to be for the debt to be paid in the 10 years? (Round to the nearest cent.)
Monthly payment = $
Question 4
How many months would it take to pay off the debts under the original plan if interest were 15% on each loan? (Recall that each of the original loans had an individual monthly payment. Round your answer
up to the nearest whole number.)
months 182
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