Question

Frederick took out a 20-year loan for $70,000 at an APR of 2.2%, compounded monthly. Approximately how much would he save if he paid it off 9 years early?

Answer 1

Answer:

$38,645.7208

Step-by-step explanation:

Given that

Principal = $70,000

Time = 20 years

Rate = 2.2%

The calculation of the amount of saving is shown below:-

$=P(1+r)^t$

A = Future amount

P = Principal amount  

$r = \frac{APR}{12}$  

$r = \frac{0.022}{12}$

0.001833333

t = 20 years which is equals to 240 months

$A=\ 70,000\times (1+0.001833333)^{240}$

$A=\ 70,000\times 1.552081726$

= $108,645.7208

And, the loan amount for 20 years is $70,000

So,

He would save by paying off 9 years early is

= $108,645.7208  - $70,000

= $38,645.7208

Answer 2

Its $3644.67  since everyone couldn't find it solved it myself ;)