Solve the problem You will need to use the annual percentage

Solve the problem. You will need to use the annual percentage rate table 9) Tran used a fixed installment loan from his bank to finance braces for his daughter. He borrowed $4800 and has 18 monthly payments of $287.17 each a. Find the APR of the loan. (4 points) b. Instead of making his 6th payment, Tran decides to pay the remaining balance on the loan. How much interest will Tran save? (4 points)

Solution

A). APR of loan would be 0.7917%

PV= $,4800 (Borrowed amount at time zero)

PMT= $287.17(Monthly payment)

N= 18 (number of months)

FV= 0

I/Y= .7917 (APR of the loan)

B). Tran will save $252.40

Total Interest would be= (287.17*18) $5,169.06 - $4,800= $ 378.60

And, as of 6th payment date Trans has already paid the 5 payments including interest and principal amount and at the time of 6th payment Trans need to pay 6th month interest and full remainning amount on loan.

So, Trans will save total of $252.40 ($378.60- $126.20) as interest amount.

Note:- $126.20 is the total 6 months interest.

Kinldy let me know if you have any questions.

Thank you.