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1 June, 20:02

Enrique has a 60-month fixed installment loan, with a monthly payment of $77.86. The amount he borrowed was $3500. Instead of making his 36th payment, Enrique is paying the remaining balance on the loan. How much interest will Enrique save (use the actuarial method)

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  1. 1 June, 21:44
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    Total interest saved = $ 774.9

    Explanation:

    Formula for total interest saved:

    Total interest save = total interest in one month + Total interest at 36th month

    Calculating total interest in one month:

    As Enrique has a 60-month fixed installment loan, with a monthly payment of $77.86 so

    1st payment in one month = 60 * 77.86

    1st payment in one month = $4,671.6

    As the amount he borrowed was $3500.

    Therefore

    Total interest = 4,671.6 - 3,500

    Total interest = $1,171.6

    Calculating total interest at 36th month:

    Total interest at 36th month = (60 - 35) * 77.86

    Total interest at 36th month = 1,946.5

    Therefore by putting the values in the above formula, we get

    Total interest saved = $1,946.5 - $1,1716

    Total interest saved = $ 774.9
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