Question

PLEASE I NEED HELP ASAP!!!!!

part 1) The Healthy Pantry bought new shelving and financed $7,300 with 36 monthly payments of $267.65 each.
Suppose the firm pays the loan off with 13 payments left.

Use the Rule of 78 to find the amount of unearned interest.

part 2) The Healthy Pantry bought new shelving and financed $7,300 with 36 monthly payments of $267.65 each.
Suppose the firm pays the loan off with 13 payments left.

Use the Rule of 78 to find the amount necessary to pay off the loan.

Answer 1

Hi there
Part 1
The formula to find u (unearned interest) is
U=[f k (k+1)]÷[n (n+1)]
F finance charge 2335.4
267.65×36
=9,635.4
9,635.4−7,300
=2,335.4
K number of remaining monthly payments 23
36−13=23
N original number of payments 36
So
U=((2,335.4×23×(23+1))÷(36×(36+1))
U=967.82

Part 2
Payoff amount=(k+1) R-u
K number of remaining monthly payments 23
R monthly payment 267.65
U unearned interest 967.82
So
Payoff amount=(23+1)×267.65−967.82
=5,455.78

Hope it helps