Question

Sarah Yost took out a 48-month fixed installment loan of $26,000.00 at 9% APR to open a gift shop. She began making monthly payments of $647.02. Sarah's business does better than expected and instead of making her 12th payment, Sarah decides to repay her loan in full. Use the actuarial method to determine how much interest Sarah will save.

Answer 1

Answer:

Use this formula to answer

u = npV/100+V

u = unearned interest

p = monthly payment

n = number of remaining monthly payments

V = the value from the APR table that corresponds to the annual percentage of loan rate for the number of remaining payments

it should look like this

Example:

n= 12 months, p = 5000, u = 9 months  , V = 0.015%

They know their unearned interest/interest(u) already.

n = 36(?)(or 35 if she didn't pay the 12th month and only has for 11) months,  

p = $647.02

V = 9%

you can possibly calculate u