CH.7P1-6

# CH.7P1-6 - 12.00 24 2500(\$117.68 8.75 24 2500(\$113.93 6.93...

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P.1 7% + 6% = 13% almost doubling would increase monthly payments, but the principal amount would be decreasing. P.2 8.75% 0.79 6.93% with state and federal tax savings \$47.07 2.5 \$117.68 for unsecured debt \$45.57 2.5 \$113.93 for home equity loan Compounded Take pmt \$113.93 24 \$2,500.00 12.00% 6.93% 8.75% months Loan (\$321.16) (\$216.63) (\$252.47) Simple PV Intrest Int/pmt \$2,500.00 \$600.00 \$25.00 So, a savings of \$90 is reported over the life of the loan in addition to tax savings of \$48.62. Therefore, Rico should choose the home equity loan to save the most money. I Rate Nper Princ. PMT

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Unformatted text preview: 12.00% 24 2500 (\$117.68) 8.75% 24 2500 (\$113.93) 6.93% 24 2500 (\$111.85) P.3 \$1,500.00 12.00% \$180.00 \$1,680.00 \$140.00 134.69 p/mo p/mo simple Saving \$63.72 per month using loan with simple interest method. P.4 If the above was paid off in 6 moths they would save 27% of total interest payments (\$48.46) Rebate = 0.27 \$180.00 \$48.46 P.5 Borrowing \$1000 repaid monthly for 12 months is better. \$60 for the single payment loan for a total of \$1060 vs. intrest on installment loan is \$32.80 for a monthly payment of \$86.07, totaling \$1032.80 P.6 P.7 P.8...
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## This note was uploaded on 04/25/2010 for the course FINC 110 taught by Professor Bunker during the Spring '09 term at Westminster UT.

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CH.7P1-6 - 12.00 24 2500(\$117.68 8.75 24 2500(\$113.93 6.93...

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