Based on the fact that Terry had a bankruptcy, the additional interest she will pay over the life of the loan is a. $49,000
What is the current monthly amount Terry pays?
This can be found by the formula:
Loan amount = Amount paid x ( 1 - ( 1 + rate) ^-number of periods) / rate
Rate is: Number of periods
= 11% / 12 months = 25 x 12
= 11/12% = 300 months
Amount is:
60,000 = Amount x ( 1 - ( 1 + 11/12%)⁻³⁰⁰) / 11/12%
60,000 = Amount x 102.029043745
Amount = 60,000 / 102.029043745
= $588.07
What is the additional interest Terry will pay?
= (Amount Terry pays now - Amount Terry would have paid) x 300 months
= (588.07 - 424.07) x 300
= $49,200
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