With a typical installment loan, you are asked to sign a contract stating the terms of repayment. If you pay off the loan early, you are entitled to an interest rebate. For example, if you finance $500 and are charged $90 interest (APR 8.46%), the total to be repaid is $590 with 24 monthly payments of $24.59. After 1 year, you decide to pay off the loan, so you figure that the rebate should be $45 (half of the interest for 2 years), but instead you are told the interest rebate is only $23.40. What happened? Look at the fine print on the contract. It says interest will be refunded according to the Rule of 78. The formula for the rebate is as follows: INTEREST REBATE = K(k + 1) x FINANCE CHARGE n(n + 1) where k is the number of payments remaining and n is the total number of payments. Determine the interest rebate on the following. (Round your answers to the nearest cent.) (a) $1,026 interest on an 18-month loan; pay off loan after 12 months $ (b) $330 interest on a 2-year loan with 10 payments remaining $ (c) $10,900 borrowed at 11% on a 4-year loan with 36 months remaining $ (d) $55,000 borrowed at 10% on a 5-year loan with 18 payments remaining
With a typical installment loan, you are asked to sign a contract stating the terms of repayment. If you pay off the loan early, you are entitled to an interest rebate. For example, if you finance $500 and are charged $90 interest (APR 8.46%), the total to be repaid is $590 with 24 monthly payments of $24.59. After 1 year, you decide to pay off the loan, so you figure that the rebate should be $45 (half of the interest for 2 years), but instead you are told the interest rebate is only $23.40. What happened? Look at the fine print on the contract. It says interest will be refunded according to the Rule of 78. The formula for the rebate is as follows: INTEREST REBATE = K(k + 1) x FINANCE CHARGE n(n + 1) where k is the number of payments remaining and n is the total number of payments. Determine the interest rebate on the following. (Round your answers to the nearest cent.) (a) $1,026 interest on an 18-month loan; pay off loan after 12 months $ (b) $330 interest on a 2-year loan with 10 payments remaining $ (c) $10,900 borrowed at 11% on a 4-year loan with 36 months remaining $ (d) $55,000 borrowed at 10% on a 5-year loan with 18 payments remaining
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
Related questions
Concept explainers
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
Topic Video
Question
Transcribed Image Text:With a typical installment loan, you are asked to sign a contract stating the terms of repayment. If you pay off the loan early, you are entitled to an interest rebate. For example, if you finance $500
and are charged $90 interest (APR 8.46%), the total to be repaid is $590 with 24 monthly payments of $24.59. After 1 year, you decide to pay off the loan, so you figure that the rebate should be
$45 (half of the interest for 2 years), but instead you are told the interest rebate is only $23.40. What happened? Look at the fine print on the contract. It says interest will be refunded according to
the Rule of 78. The formula for the rebate is as follows:
k(k + 1)
n(n + 1)
INTEREST REBATE =
x FINANCE CHARGE
where k is the number of payments remaining and n is the total number of payments. Determine the interest rebate on the following. (Round your answers to the nearest cent.)
(a) $1,026 interest on an 18-month loan; pay off loan after 12 months
$
(b) $330 interest on a 2-year loan with 10 payments remaining
$
(c) $10,900 borrowed at 11% on a 4-year loan with 36 months remaining
$
(d) $55,000 borrowed at 10% on a 5-year loan with 18 payments remaining
$
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, probability and related others by exploring similar questions and additional content below.Recommended textbooks for you
A First Course in Probability (10th Edition)
Probability
ISBN:
9780134753119
Author:
Sheldon Ross
Publisher:
PEARSON
A First Course in Probability (10th Edition)
Probability
ISBN:
9780134753119
Author:
Sheldon Ross
Publisher:
PEARSON