AnswersPERFIN Personal Finance Sem 2 26-27BankruptcyQuestion 7
7
QuizMultiple Choice

Bankruptcy

Question 7 • [PERFIN] Personal Finance, Sem 2 (26-27)

Cheri took out a loan for $14,350. The loan term was 3 years and Cheri’s payments were $625.77 per month. Since Cheri had filed for bankruptcy several years prior, she ended up paying a higher interest rate. With a better credit rating, her payments could have been $431.21 per month. How much more in interest did Cheri end up paying for her loan because of her bankruptcy?

Answer
A
$5,836.80
B
$2,334.72
C
$8,624.16
D
$7,004.16

Explanation

The loan lasts 3 years, so Cheri makes 3 × 12 = 36 monthly payments. Her higher payment is $625.77 − $431.21 = $194.56 more each month. Over 36 months, that adds up to $194.56 × 36 = $7,004.16 in additional interest, so the correct choice is $7,004.16.

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