Question

Use the rule of 78 to find the finance charge refund if the Finance charge was $476 on a 12 month payment plan and the loan was paid off with 5 payments remaining

Answer 1

finance charge refund is $91.53

Explanation:

given data

finance charge F = $476

time t = 12 month

no of payment n = 5

to find out

finance charge refund

solution

we will apply here finance charge refund formula that is

finance charge refund = F ×
`(n * (n+1))/(t* (t+1))`

put here value we get

finance charge refund = 476 ×
`(5 * (5+1))/(12* (12+1))`

finance charge refund = 476 ×
`(5 * (6))/(12 * (13))`

finance charge refund = 476 ×
`(30)/(156)`

finance charge refund = 476 × 0.1923

finance charge refund = 91.53

so finance charge refund is $91.53