Question
You needed $10,000 and obtained the following loan: Loan specifics: You are expected to pay 24 equal monthly installments ($A per month) at APR 12%,
You needed $10,000 and obtained the following loan: Loan specifics: You are expected to pay 24 equal monthly installments ($A per month) at APR 12%, compounded monthly, starting from a month from obtaining the loan. If you miss a payment, your APR goes up to 24%, duration of the loan does not change but your monthly fixed payments go up. You miss your 12th payment. On the day of your 13th payment, the bank offers you a new deal. If you pay an additional $820 at the time of your 13th payment, you will continue to make your payments as before with no interest hike. If your discount rate is monthly 1.12%, would you prefer to make the additional payment or have the interest hike?
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