Jeff buys a new motorcycle for $12,000. He receives $4500 as a trade-in on his old motorcycle and uses the money as a down payment. Jeff finances the balance at 6.5% APR over 24 months. Before making his 12th payment, he decides to pay off the loan.

(a) Use Table 10.2 to determine the total interest Jeff would pay if all 24 payments were made.

(b) What were Jeff’s monthly payments?

(c) How much money will Jeff save by paying off the loan early?

(d) What is the total amount due to pay off the loan?

Table 10.2:

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Number Annual Percentage Rate of payments 4.0% 4.5% 6.0% 6.5% 10.0% 5.0% 5.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% (Finance charge per $100 of amount financed) 1.32 1.46 1.76 2.20 2.35 2.49 4.66 6.86 2.64 2.79 2.93 1.61 3.28 1.17 1.90 2.05 3.83 5.63 2.45 2.73 4.00 5.22 4.94 5.50 3.56 4.11 4.39 12 2.18 3.00 3.20 3.60 4.41 4.82 5.22 6.04 6.45 7.28 18 7.69 8.10 24 30 4.75 5.92 5.29 6.59 5.83 7.26 7.45 10.75 4.22 5.25 6.37 8.00 8.54 6.91 9.09 9.64 10.19 9.98 10.66 11.35 11.98 9.30 12.74 13.43 7.94 9.52 10.34 12.73 13.83 8.61 12.04 36 6.29 7.90 8.71 11.63 14.48 15.32 16.16 21.74 7.09 11.16 12.81 13.64 48 8.38 10.54 19.45 20.59 9.46 11.86 13.23 14.94 16.06 20.23 21.66 23.10 24.55 26.01 17.18 18.31 10.50 14.61 16.00 17.40 18.81 27.48