A borrower has a $50000 loan with the Easy-Credit Finance Company. The loan is to be...

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A borrower has a $50000 loan with the "Easy-Credit" Finance Company. The loan is to be repaid over 14 years via monthly payments at 8.6%/year compounded monthly. Just after the 7th payment, the borrower learns that his local bank would lend him money at 6.6%/year compounded monthly. Assuming that the contract stipulates an early repayment penalty equal to the interest rate differential times the outstanding balance times the term remaining in the standard 5-year guaranteed interest period, what would be the new monthly payment? A borrower has a $50000 loan with the "Easy-Credit" Finance Company. The loan is to be repaid over 14 years via monthly payments at 8.6%/year compounded monthly. Just after the 7th payment, the borrower learns that his local bank would lend him money at 6.6%/year compounded monthly. Assuming that the contract stipulates an early repayment penalty equal to the interest rate differential times the outstanding balance times the term remaining in the standard 5-year guaranteed interest period, what would be the new monthly payment?

Answer rating: 100% (QA)

Monthly payments of original loan 51284 calculated as follows ... View the full answer