9) Rohan used a fixed installment loan from his bank to buy new living room furniture....

9) Rohan used a fixed installment loan from his bank to buy new living room furniture. He borrowed $9250 and has 48 monthly payments of $230.19 each. a. Find the APR of the loan. b. Instead of making his 18th payment, Rohan decides to pay the remaining balance on the loan. How much interest will Rohan save?

Expert Solution

1. Using hit and trial in excel worksheet in the given format below, APR can be calculated.

In this case, APR = 9%

2. If Rohan decides to pay the remaining balance of loan at the time of making his 18th payment, he will be able to save = $ 790.

For calculations, please refer screenshots below.


Principal Amount		$ 9,250
Interest Rate per annum		9.00%
Period - Total Months		48
Monthly Payment		230.19	($230.19)


Year	Opening Principal	Interest	Principal Repayment	Annual Payment	Outstanding Balance
0	$ 9,250	$ -	$ -	$ -	$ 9,250
1	$ 9,250	$ (69)	$ (161)	$ (230)	$ 9,089
2	$ 9,089	$ (68)	$ (162)	$ (230)	$ 8,927
3	$ 8,927	$ (67)	$ (163)	$ (230)	$ 8,764
4	$ 8,764	$ (66)	$ (164)	$ (230)	$ 8,599
5	$ 8,599	$ (64)	$ (166)	$ (230)	$ 8,434
6	$ 8,434	$ (63)	$ (167)	$ (230)	$ 8,267
7	$ 8,267	$ (62)	$ (168)	$ (230)	$ 8,099
8	$ 8,099	$ (61)	$ (169)	$ (230)	$ 7,929
9	$ 7,929	$ (59)	$ (171)	$ (230)	$ 7,759
10	$ 7,759	$ (58)	$ (172)	$ (230)	$ 7,587
11	$ 7,587	$ (57)	$ (173)	$ (230)	$ 7,413
12	$ 7,413	$ (56)	$ (175)	$ (230)	$ 7,239
13	$ 7,239	$ (54)	$ (176)	$ (230)	$ 7,063
14	$ 7,063	$ (53)	$ (177)	$ (230)	$ 6,886
15	$ 6,886	$ (52)	$ (179)	$ (230)	$ 6,707
16	$ 6,707	$ (50)	$ (180)	$ (230)	$ 6,527
17	$ 6,527	$ (49)	$ (181)	$ (230)	$ 6,346
18	$ 6,346	$ (48)	$ (183)	$ (230)	$ 6,163
19	$ 6,163	$ (46)	$ (184)	$ (230)	$ 5,979
20	$ 5,979	$ (45)	$ (185)	$ (230)	$ 5,794
21	$ 5,794	$ (43)	$ (187)	$ (230)	$ 5,607
22	$ 5,607	$ (42)	$ (188)	$ (230)	$ 5,419
23	$ 5,419	$ (41)	$ (190)	$ (230)	$ 5,230
24	$ 5,230	$ (39)	$ (191)	$ (230)	$ 5,039
25	$ 5,039	$ (38)	$ (192)	$ (230)	$ 4,846
26	$ 4,846	$ (36)	$ (194)	$ (230)	$ 4,652
27	$ 4,652	$ (35)	$ (195)	$ (230)	$ 4,457
28	$ 4,457	$ (33)	$ (197)	$ (230)	$ 4,260
29	$ 4,260	$ (32)	$ (198)	$ (230)	$ 4,062
30	$ 4,062	$ (30)	$ (200)	$ (230)	$ 3,862
31	$ 3,862	$ (29)	$ (201)	$ (230)	$ 3,661
32	$ 3,661	$ (27)	$ (203)	$ (230)	$ 3,458
33	$ 3,458	$ (26)	$ (204)	$ (230)	$ 3,254
34	$ 3,254	$ (24)	$ (206)	$ (230)	$ 3,048
35	$ 3,048	$ (23)	$ (207)	$ (230)	$ 2,841
36	$ 2,841	$ (21)	$ (209)	$ (230)	$ 2,632
37	$ 2,632	$ (20)	$ (210)	$ (230)	$ 2,422
38	$ 2,422	$ (18)	$ (212)	$ (230)	$ 2,210
39	$ 2,210	$ (17)	$ (214)	$ (230)	$ 1,996
40	$ 1,996	$ (15)	$ (215)	$ (230)	$ 1,781
41	$ 1,781	$ (13)	$ (217)	$ (230)	$ 1,564
42	$ 1,564	$ (12)	$ (218)	$ (230)	$ 1,346
43	$ 1,346	$ (10)	$ (220)	$ (230)	$ 1,125
44	$ 1,125	$ (8)	$ (222)	$ (230)	$ 904
45	$ 904	$ (7)	$ (223)	$ (230)	$ 680
46	$ 680	$ (5)	$ (225)	$ (230)	$ 455
47	$ 455	$ (3)	$ (227)	$ (230)	$ 228
48	$ 228	$ (2)	$ (228)	$ (230)	$ 0

	Interest Saved	$ (790)

For any query or clarification, please leave a comment.

jeff jeffy answered 2 months ago

A local furniture store is advertising a deal in which you buy a $4,700 living room...

A local furniture store is advertising a deal in which you buy a $4,700 living room set with three years before you need to make any payments (no interest cost is incurred). How much money would you have to deposit now in a savings account earning 6 percent APR, compounded monthly, to pay the $4,700 bill in three years? How much would you have to deposit in the savings account each month to be able to pay the bill?

Towncenter Furniture specializes in modern living room and dining room furniture. Merchandise sales are subject to...

Towncenter Furniture specializes in modern living room and dining room furniture. Merchandise sales are subject to an 8 percent sales tax. The firm’s credit sales and sales returns and allowances for February 2019 are reflected below, along with the general ledger accounts used to record these transactions. The balances shown are for the beginning of the month. DATE TRANSACTIONS Feb 1 Sold a living room sofa to Sun Yoo; issued Sales Slip 1615 for $4,790 plus sales tax of $383.20....

Mike went with his girlfriend to Bill's Furniture Store to purchase a living room set. When...

Mike went with his girlfriend to Bill's Furniture Store to purchase a living room set. When he found one that he liked, he told the salesperson (Jim ) that he required time to check his finances to make the purchase. Jim advised that "these units are going fast” but he would hold the “Royal Prince” living room set for him for ten days at a cost of $2,500 and he wrote the name of the unit, the cost and time...

You need a 27-year fixed rate loan to buy a new car for 22,000. Your bank...

You need a 27-year fixed rate loan to buy a new car for 22,000. Your bank will lend you the money at an annual interest rate of 5.3% APR. What is your annual payment? 1. 1,550.51 2. 814.81 3. 1,472.47 4. 665.52

You are the loan department supervisor for a bank. This installment loan is being paid off...

You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round dollars to the nearest cent.) Amount Financed Number of Payments Monthly Payment Payments Made Rebate Fraction Finance Charge Rebate Loan Payoff $1,700 18 $128.89 13 - $ $

5. Jamestown Furniture Co. is a small, but fast-growing manufacturer of living room furniture. Its two...

5. Jamestown Furniture Co. is a small, but fast-growing manufacturer of living room furniture. Its two principal products are end tables and sofas. There are five processes in the manufacturing at Jamestown: Cutting the lumber, cutting the fabric, sanding, staining, and assembly. Jamestown has one employee working in fabric cutting and one employee working in staining. These are relatively skilled workers and could be replaced only with some difficulty. The cutting and sanding operations are performed by two workers each,...

2. You are the loan department supervisor for the Pacific National Bank. The following installment loan...

2. You are the loan department supervisor for the Pacific National Bank. The following installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate, and the payoff for each loan. Enter the rebate fraction in this form: numerator / denominator (e.g., 82/165). Do not round intermediate calculations. Round your answers for finance charge rebate and loan payoff to the nearest cent. Do not reduce to lowest terms. Amount Financed...

Diane Wallace bought a living-room suite on credit, signing an installment contract with a finance company...

Diane Wallace bought a living-room suite on credit, signing an installment contract with a finance company that requires monthly payments of $49.06 for three years. The first payment is made on the date of signing and interest is 20% compounded monthly. (a) What was the cash price? (b) How much will Diane pay in total? (c) How much of what she pays will be interest? (d) Based on the cash price calculated in part (a), if the interest rate is...

Mr. Green took a loan of $10,000 to buy a used car for his son. The...

Mr. Green took a loan of $10,000 to buy a used car for his son. The interest rate on the loan was 12% per year, and the lender agreed to take an annual payment for 5 years. What is the amount of principal he paid at the time of the second payment? Please show solution

1. Suppose you want to buy some new furniture for your family room. You currently have...

1. Suppose you want to buy some new furniture for your family room. You currently have $500 and the furniture you want costs $589. If you can earn 5%, how many years will you have to wait if you don’t add any additional money? Round your answer to two decimals. 2. How much would you need to invest at the end of each year if you need $40,000 in 9 years and you can earn 6% interest? Round your answer...

Question