Question

27. A recent college graduate buys a new car by borrowing $18,000 at 8.4%, compounded monthly, for 5 years. She decides to pay an extra $15 per payment. (a) What is the monthly payment required by the loan, and how much does she decide to pay each month? (b) How many payments (that include the extra $15) will she make? (c) How much will she save by paying the extra $15?

Answer 1

The college graduate will save $22,725 -
$21,825 = $900 by paying the extra $15.
in summary:
(a) The monthly payment required by the loan is approximately $363.75, and she decides to pay $378.75 each month.
(b) She will make a total of 60 payments (including the extra $15) over 5 years.
(c) She will save $900 by paying the extra $15.