Assume you have a student loan that you will pay off in 10 years. How much would you save an interest if he refinanced at the new rate? Amount ofLoan$26,000OriginalRate6%NewRate4% Annual Interest Rate4%5%6%8%10%12%3$29.5329.9730.4231.3432.2733.21Number of Years for the Loan1020$22.58$10.12$6.0623.0310.616.6023.4911.107.1624.4112.138.3625.3613.229.6526.3314.3511.0130$4.775.376.007.348.7810.29

The question is related to refinancing the loan at lower interest rate which was originally financed…

Answered: Assume you have a student loan that you…

Assume you have a student loan that you will pay off in 10 years. How much would you save an interest if he refinanced at the new rate?

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter10: Liabilities: Current, Installment Notes, And Contingencies

Section: Chapter Questions

Problem 10.1EX: Current liabilities Bon Nebo Co. sold 25,000 annual subscriptions of Bjorn for 85 during December...

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Assume you have a student loan that you will pay off in 10 years. How much would you save an interest if he refinanced at the new rate?

Amount of
Loan
$26,000
Original
Rate
6%
New
Rate
4%

Annual Interest Rate
4%
5%
6%
8%
10%
12%
3
$29.53
29.97
30.42
31.34
32.27
33.21
Number of Years for the Loan
10
20
$22.58
$10.12
$6.06
23.03
10.61
6.60
23.49
11.10
7.16
24.41
12.13
8.36
25.36
13.22
9.65
26.33
14.35
11.01
30
$4.77
5.37
6.00
7.34
8.78
10.29

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