AnswersPERFIN Personal Finance Sem 2 26-27BankruptcyQuestion 16
16
QuizMultiple Choice

Bankruptcy

Question 16 • [PERFIN] Personal Finance, Sem 2 (26-27)

Nellie has a bankruptcy on her credit report and therefore pays higher interest rates on her current loans. She took out a car loan for $45,000 payable for 6 years at an interest rate of 15%. If she had not applied for bankruptcy, she would have been able to take out the loan at a rate of 6%. Approximately how much more in interest over the life of the loan does Nellie have to pay?

Answer
A
$68,510.16
B
$53,696.16
C
$32,206.32
D
$14,814.00

Explanation

Use the fixed-payment loan formula with 72 monthly payments. At 15%, the monthly payment is about $951.53, for total payments of $68,510.16; at 6%, it is about $745.78, for total payments of $53,696.16. The difference is $68,510.16 − $53,696.16 = $14,814.00, so the best answer is $14,814.00.

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