Answer:
Explanation:
(a)the monthly payment for Mary
Given that the nominal interest rate = 8%
or, Monthly interest rate = 8%/12= 0.667%
Thus the monthly payment at 0.667% int. per month, A1 = $32,000 (A/P, 0.0067%, 36) =
loan ÷ [ (1-(1 / (1+r∧n))) / r ]
32,0000 ÷ [ (1-(1 / (1+0.00667∧60))) / 0.00667 ]
32,000 ÷ 49.3138 = $648.91
(b)the loan balance immediately after the 24th payment
After the 24th payment, 12 more payments will be left before the loan is retired.
648.91 × [ (1-(1 / (1+0.00667∧12))) / 0.00667 ]
= $7459.57
(c)the monthly payment for the remainder of the loan if the interest rate is reduced to 9%
Given that the nominal interest rate is 9%,
or, Monthly interest rate = 9%/12 = 0.75%
Thus the monthly payment at 3/4% int. per month, A2 = $7459.57 (A/P, 0.75%, 12) =
7459.57 ÷ [ (1-(1 / (1+0.0075∧12))) / 0.0075 ]
7459.57 ÷ 11.4349
= $652.35
