Ben bought a used car for $7,200. He agreed to make 36 monthlypayments of $225.

Question

Ben bought a used car for $7,200. He agreed to make 36 monthlypayments of $225. After making 20 payments, Ben wants to pay offthe rest of this rule of 78s loan. What will be Ben's finalpayoff? A) $900.00
B) $2,700.00
C) $3,416.22
D) $3,364.86 Ben bought a used car for $7,200. He agreed to make 36 monthlypayments of $225. After making 20 payments, Ben wants to pay offthe rest of this rule of 78s loan. What will be Ben's finalpayoff? Ben bought a used car for $7,200. He agreed to make 36 monthlypayments of $225. After making 20 payments, Ben wants to pay offthe rest of this rule of 78s loan. What will be Ben's finalpayoff?

Explanation / Answer

C) 3416.22 For 36 months, the magic number (the sum of integers from 1 to 36)is 666. First month's interest is thus 36/666 times the total interest due(the same amount as under a rule of simple interest). That is, inthe first month, our payment of 225 pays off 48.65 of interest and176.36 of principal, resulting in an end balance of 7023.65.Continuing the calculation, the second month's interest is 35/366times total interest due. The end balance after 20 payments is3416.22.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.