Aa Aa 10. Comparing payments on installment loans when using the simple-interest or add-on methods to compute finance charges Comparing Loan Payments Using the Simple Interest and Add-on Methods of Interest Computation Installment loans allow barrowers to repay the loan with periodic payments over time. They are more common than single- payment loans because it is easier for most people to pay a fixed amount periodically (usually monthly) than budget for paying one big amount in the future. Interest an installment loans may be computed using the simple interest method on the add-on method. For an installment loan using simple interest and equal payments thro the life ofthe loan, interestis charged only ughout on the outstanding balance. As each payment is made, more of it is allocated to reducing the principal. As the principal owed decreases, so too does the interest charged on it. Since the payment is always the same each month, the allocation between principal and interest is always different (more to the principal and less to the interest The add-on method is a widely used technique for computing interest on installment loans. With the add-on method, interest is calculated by applying the stated interest rate to the original balance of the loan. Jeff and Julia are taking out installment loans for $2,300 at a stated interest rate of 10%. The term of each loan is two years. Answer the following questions using the repayment information table that follows the questions as necessary. For convenience, the table headings are displayed above the scroll box. Jeff Julia Jeff's loan uses simple interest to compute finance Julia's loan uses the add-on method to compute finance charges charges Jeff's monthly payment rounded to the nearest cent is Julia's total finance charge rounded to the nearest cent is 105.42 106.13 Complete the following tables using all interim figures rounded to the nearest cent in your calculations. Enter all figures as positive numbers rounded to the nearest cent. Note that the tables are slighty different to reflect the different methods used for finance charges