Grant borrowed $5,530 to remodel his bathroom and agreed to make 30 monthly payments of $235. He paid the...

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25. Grant borrowed $5,530 to remodel his bathroom and agreed to make 30 monthly payments of $235. He paid the debt in full after 24 months. Find the amount needed to repay the loan in full using the Rule of 78.
A) $1,410.00
B) $7,050.00
C) $176.67
D) $1,330.97

SnapAndSolve AI · Accepted Answer

Answer: D) $1,330.97Explanation: The Rule of 78 is used to calculate the interest rebate on a loan paid off early. It allocates more interest to the earlier payments. The sum of the digits for a 30-month loan is 465 (1+2+3+...+30). After 24 months, the sum of the digits for the remaining 6 months is 21 (25+26+27+28+29+30). The interest rebate is calculated as a proportion of the total interest. The total interest is $1,570 ($235 * 30 - $5,530). The rebate is (21/465) * $1,570 = $70.03. The remaining balance is $5,530 - ($235 * 24) + $70.03 = $1,330.97.

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Grant borrowed $5,530 to remodel his bathroom and agreed to make 30 monthly payments of $235. He paid the...

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