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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

You are one of the branch managers of the Insignia Bank. Today two loan applications were submitted to your office. Calculate the requested information for each loan.

Amount Financed Interest Rate Term of Loan Number of $1,000s Financed Table Factor Monthly Payment Total Interest
$98,500 5.25% 20 years ______ ______ _________ __________

To determine

To calculate: The number of $1,000s financed, table factor, monthly payment and total interest when amount financed is $98,500, interest rate is 5.25 % and term of loan is 20 years.

Explanation

Given Information:

Amount Financed is $ 98500

Interest Rate is 5.25 %

Term of loan is 20 years

Formula used:

The formula for the number of $ 1000 is

Number of $1000s financed = Amount Financed1000

Use the table 14.1 to calculate the table factor. Locate the table factor on the intersection of the number of years column and the interest rate row.

The formula for Monthly payment is

Monthly Payment = Number of 1000s financed × Table Factor

And

Number of payments = Term of loan × 12 

Total interest is given by,

Total Interest = (Monthly payment × Number of payments) Amount Financed

Calculation:

Consider the given values,

Amount Financed = $98,500Interest Rate = 5.25%Term of Loan = 20years

To calculate number of $ 1000 financed, apply the formula

Number of $1000s financed = Amount Financed1000= 985001000= 98

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