Home Equity Loan Work the Mail Solicitation Home Equity Loan project described on page 417 of the text. I encourage you to use other than that, you don't need to give me any kind of flashy write-up. sover on your calculator. If you do, please show me what your substitutions are (all of them), but NOTES: 1. You should get a somewhat surprising answer to (a)-the loan is not all it appears. This is a simple calculation that does not need the TVM Solver. 2. 3. For part (d). you need to calculate the pay-off period FOR EACH LOAN SEPARATELY Note that if you try to do this using the formulas, then you will have to solve an exponential equation. To repeat: you will give me three separate calculations with three separate answers (and don't add those answers). I Mail Solicitation Home Equity Loan: Is This a Good Deal? Discover offers a home equity line of credit that lowers the total of the monthly payments on several hypothetical loans by $366.12. (See the following table.) The home equity loan payment is based on . 10.49% APR annualized over a 10-year term." This means that the loan is amortized at 10.49% with monthly payments. (a) Using this interest rate and monthly payments for the 10 years, how much money will still be owed at the end of the 10 years? (b) How much is paid during the 10 years? (c) How much would the payment have to be for the debt to be paid in the 10 years? (d) How long would it take to pay off the debts under the original plan if interest were 15% on each loan? Current Monthly Payment Discover Home Equity Example Loan Amount Payment Amount Payment Loan Type Monthly Loan Monthly Bank cards Auto loan Department store $10,000 $186.00 PAID OFF NONE $12,500 $320.03 PAID OFF NONE $2,500 $78.63 PAID OFF NONE cards $25,000 $218.54 Discover home equity line of credit Total $25,000 $584.66 $25,000 $218.54 Source: Discover Loan Center mailer