Rebecca borrowed $20 400 from her local credit union to pay for the upgrades in her kitchen. She wants to pay the loan with monthly payments over the period of 3 years. What is the interest included in the tenth payment, if the rate charged by the credit union is 6% monthly?

Rebecca borrowed $20 400 from her local credit union to pay for the upgrades in her kitchen. She wants to pay the loan with monthly payments over the period of 3 years. What is the interest included in the tenth payment, if the rate charged by the credit union is 6% monthly?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 19PROB

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Rebecca borrowed $20 400 from her local credit union to pay for the upgrades in her
kitchen. She wants to pay the loan with monthly payments over the period of 3 years.
What is the interest included in the tenth payment, if the rate charged by the credit union is
6% monthly?

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