Answer:
Explanation:
If required, round your answers to two decimal places.
Pay off loan in years Additional Payment
10 Years $
11 Years $
12 Years $
Which option for prepayment if any, would you choose and why?
New monthly payment
PMT(3%/12, 15*12, 208555.87, 0, 0) = $1,440.25
Now, we need find the additional amount that they need to pay in order to repay their outstanding loan in 10,11 and 12 years. So, using the above formula, we get
10-year installment = PMT(3%/12, 10*12, 208555.87, 0, 0) = $2,013.83
11-year installment = PMT(3%/12, 11*12, 208555.87, 0, 0) = $1,856.93
12-year installment = PMT(3%/12, 12*12, 208555.87, 0, 0) = $1,726.40
Additional Monthly Payment
10-year: $2,013.83 - $1,440.25 = $573.58
11-year: $1,856.93 - $1,440.25 = $416.68
12-year: $1,726.40 - $1,440.25 = $286.15
