10
QuizMultiple Choice

Bankruptcy

Question 10 • 26-27 Ignite Technical Math-Financial Math - MA2007

Zoe filed for bankruptcy several years ago and now wants to take out a loan for $15,200. Since Zoe has a past bankruptcy, she will end up paying a higher interest rate. The loan term is four years, and her payments are $819.20 per month. With a better credit rating, her payments could have been $440.82 per month. How much more in interest will Zoe end up paying for her loan because of her bankruptcy?

Answer
A
$4,540.56
B
$15,135.20
C
$23,346.24
D
$18,162.24

Explanation

A four-year loan has 4 × 12 = 48 monthly payments. Zoe pays $819.20 − $440.82 = $378.38 more each month because of the higher rate, so the extra amount paid over the loan is $378.38 × 48 = $18,162.24. Thus, the correct choice is $18,162.24.

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