Cynthia is 27 and has 3 years' worth of payments remaining on her student loan. She pays $312.75 a) If Cynthia's bank charges 8.95% interest per year, compounded monthly, determine the present value of the remainder of the loan. per month. b) If the bank is willing to accept early payment, how much interest would Cynthia save by paying back the rest of the loan today?

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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.