Answer:
Remaining balance would have been $37457.92
Step-by-step explanation:
number of month, n = 25 × 12 = 300 months.
APR = 3.6% annually
= 0.3% monthly ( Divide the annual rate by 12)
Principal value = $135000
[tex]\text{Monthly Payment = }\frac{rate\times principal}{1-(1+rate)^{-n}}\\\\\implies\text{Monthly Payment = }\frac{0.003\times 135000}{1-(1+0.003)^{-300}}\\\\\bf\implies\textbf{Monthly Payment = }\$683.10[/tex]
If he pay 683.10 every month for 240 months, the remaining balance on the loan is = 37,457.92
If you assume they are using monthly interest rate for 6 months, then the penalty assessed would be :
[tex]37457.9176\times (1 + \frac{0.036}{12}) ^ 6 = 38137.24 - 37457.92 = 679.32[/tex]
Since, the loan was originally scheduled to go 300 months, then paying off the loan by the end of month 240 would be 5 years early, because 5 years is equal to 60 months and 300 - 60 is equal to 240 months
The key component here is what would be the remaining balance after 240 months of paying the loan off at $683.10 every month.
That remaining balance would have been $37457.92
