EBK PFIN
6th Edition
ISBN: 8220103648844
Author: Billingsley
Publisher: CENGAGE L
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Question
Chapter 7, Problem 9FPE
a)
Summary Introduction
To determine: The amount of total interest paid by person E.
b)
Summary Introduction
To determine: The amount of monthly payment of the loan.
c)
Summary Introduction
To determine: The amount higher in add on method than simple interest method.
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Chris Jenkins is borrowing $11,500 for 5 years at 10 percent. Payments are made on a monthly basis, which are determined using the add-on method.
How much total interest will Chris pay on the loan if it is held for the full five-year term?
What are Chris' monthly payments? Round the answer to the nearest cent.
How much higher are the monthly payments under the add-on method than under the simple interest method (determined using a calculator or approximated using Exhibit 7.6)? Round the answer to the nearest cent.
Jason Stein from Topeka, Kansas, borrows $1,500 (including interest) for four years (48 months) at an interest rate of 7% per year. The loan uses the discount method for determining the amount of interest.
How much of the loan amount ($1,500) consists of interest?
How much of the loan is actually given directly to Jason?
What is the monthly payment (rounded to the nearest penny), assuming 48 monthly payments?
Steven Riley is borrowing $9,000 for 5 years at 8 percent. Payments are made on a monthly basis, which are determined using the add-on method.
How much total interest will Steven pay on the loan if it is held for the full 5-year term?
$
What are Steven's monthly payments? Round the answer to the nearest cent.
$ per month
How much higher are the monthly payments under the add-on method than under the simple interest method (determined using a calculator or approximated using Exhibit 7.6)? Round the answer to the nearest cent.
$ per month
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