Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A loan is being repaid with 20 annual payments of $180 each. At the time of the 5th payment, the borrower is allowed to pay
A loan is being repaid with 20 annual payments of $180 each. At the time of the 5th payment, the borrower is allowed to pay an extra $300 and to repay the remaining outstanding balance over the next 11 years with revised level annual payments. If the effective interest rate is 4%, how much interest did the borrower save by making the additional payment and shortening the loan? (Note; this is the total dollar amount of interest saved; not the present value or accumulated value of the interest saved.) (Answer: $263.80)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started