1. In a discussion with her father about financing her new car, Karou was surprised to hear that he once financed a car with the add-on method of interest calculation. He planned to repay the $2,000 loan within a year but was able to do so in 9 mo. because of a bonus he earned at work. The interest rate was 5% to calculate the monthly payments as well as the final payment to pay off the loan. How much interest was "saved" or rebated, using this method of financing and the rule of 78s?

=n/2*n+1

=12/2*12+1

=78

=3+2+1=6

The interest avoided was 6/78*2000(1,0.05

7.7 saved on interest

2.Assume that Karou's father could finance $2,000 today at 5% using the simple interest method of calculation. How much would the payments be? Calculate the final payment to pay off the loan after 9 mo. How much interest was "saved"?

I keep getting a mo payment of 225.65 is that correct ?