Question

Willard Hudson took out a simple interest loan of $6,000.00 at 10 percent interest for 24 months. His monthly payment is $276.60 After 4 payments the balance is $5,082.21. He pays off the loan when the next payment is due. What is the interest? What is the final payment? How much is saved by paying the loan off early?​

Answer 1

9514 1404 393

Answer:

a) $42.35

b) $5124.56

c) $407.44

Explanation:

a) The interest due is that for one month on the remaining balance:

I = Prt

I = $5082.21·0.10·1/12 = $42.35

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b) The final payment is ...

$5082.21 +42.35 = $5124.56

__

c) Had Hudson continued paying, he would have paid ...

20·$276.60 = $5532.00

So, he saved ...

$5232.00 -5124.56 = $407.44