Based on the amortization formula, these changes will save Jerry $6760.96 in finance charges.
What is the amounts for each payment?
The amounts to pay for is calculated using the amortization formula:
- P = a ÷ {{[(1 + r/n)^nt] - 1} ÷ [r/n(1 + r/n)^nt]}
where
- P is monthly payment
- a is credit amount
- r is the interest rate
- t is the time in years
- n is number of times the interest is compounded
Amount to be paid in 60 months without any changes:
From the given data:
- a = $15600
- r = 18% = 0.18
- nt = 60 months
- P = a ÷ {{[(1 + r/n)^nt] - 1} ÷ [r/n(1 + r/n)^nt]}
P = $15600 ÷ {{[(1 + 0.18/12)^60] - 1} ÷ [0.18/12(1 + 0.18/12)^60]}
P = $396.14 per month
Total payment in 60 months
Total payment in 60 months = $396.14 × 60 = $23768.40
Amount to be paid in 24 months after payment of $8500:
From the given data:
- a = $15600 - $8500 = $7100
- r = 18% = 0.18
- nt = 24 months
- P = a ÷ {{[(1 + r/n)^nt] - 1} ÷ [r/n(1 + r/n)^nt]}
P = $7100 ÷ {{[(1 + 0.18/12)^24] - 1} ÷ [0.18/12(1 + 0.18/12)^24]}
P = $354.47 per month
Total payment in 24 months = $396.14 × 24 = $8507.04
Total payment = $8500 + $8507.04 = $17007.04
Savings in interest = $23768 - $17007.04
Savings in interest = $6760.96
Therefore , these changes will save Jerry $6760.96 in finance charges.
Learn more about amortization at: https://brainly.com/question/10561878
