Question

Lillie Manson paid for tuition at a summer school with an installment loan of $3,600 at 9% interest for 12 months. Her monthly payment was $314.83. After 6 payments, the balance was $1,840.34. She paid off the loan with the next payment. What did she save by paying off the loan early?

Answer 1

lol nvm...

Answer 2

one second please.

Answer 3

hmmm...,

Answer 4

well i guess it is exponential functions for the win...
first we have to find the total amount of money she would have to pay for the 12 months. then find out how much she paid and then subtract the 2!

Answer 5

so F(x) = 3600(.9)^12

Answer 6

*sigh i still have no idea what i am doing...

Answer 7

What are the possible answers?

Answer 8

$48.64
$34.84
$1,888.98
$13.80 @undeadknight26

Answer 9

one second...

Answer 10

I am sorry i don't know...

Answer 11

Her monthly payment was $314.83. Had she continued to pay that amount for the next 6 months, as per the original terms of the loan, she would have paid a total of $314.83 * 6 = $1888.98

After 6 months the balance was $1,840.34 and she pays off the balance and the interest on the 7th month. The interest on $1,840.34 for one month at 9% interest rate is:
Prt = 1840.34 * .09 * 1/12 = $13.80. The interest combined with the principal = $13.80 + $1840.34 = $1854.14

The savings is: $1888.98 - $1854.14 = $34.84

Answer 12

Oh okay. I see. Thank you!! @ranga

And thanks for trying! @undeadknight26

Answer 13

you are welcome.