Joan used a fixed installment loan from her bank to finance her home renovation project.
She borrowed $11,000.00 at 6% APR and has 60 monthly payments of $212.67 each.
Instead of making her 30th payment, Joan decided to pay the remaining balance on the loan.
Use the actuarial method to determine how much interest Joan will save.
If you use the Finance Charge Table 11.2, page 632, and the "unearned interest formula", page 635, in your textbook to solve this problem, the result will match exactly with one of the answers. If you use a spreadsheet to do the computation, your result will not match exactly with any of the answers, but it will differ only very little (mostly less than $1) from the "correct" answer.
$435.84
$469.32
$893.85
$1,081.41
34 answers