Then Maria Acosta bought a car 2 years ago, she borrowed $17,000 for 48 months at 7.2% compounded monthly. Her monthly payments are $408.67, but she'd like to pay off the loan early. How much will she owe just after her payment at the 2-yea ark? (Round your answer to the nearest cent.)

Then Maria Acosta bought a car 2 years ago, she borrowed $17,000 for 48 months at 7.2% compounded monthly. Her monthly payments are $408.67, but she'd like to pay off the loan early. How much will she owe just after her payment at the 2-yea ark? (Round your answer to the nearest cent.)

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

1
When Maria Acosta bought a car 2 years ago, she borrowed $17,000 for 48 months at 7.2% compounded monthly. Her monthly payments are $408.67, but she'd like to pay off the loan early. How much will she owe just after her payment at the 2 =-year
2
1
mark? (Round your answer to the nearest cent.)
$

Expert Solution

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Step 1

Present Value

The total of future investment returns discounted at a given level of expected return is used to determine present value, which is the value of money in today's dollars that you expect to get from future income.

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