Joanne Flynn bought a new boat for $16,200. She put a $2,800 down payment on it. The bank’s loan was for 50 months. Finance charges totaled $5,380.00. Assume Joanne decided to pay off the loan at the end of the 22th month. (Rule of 78)
What rebate would she be entitled to and what would be the actual payoff amount? (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit this $" sign in your response.). Ok I add 16,200 to 2,800 and I got 19,000. Then I add 19,000 to 5,380 which is equal to 24,380, 50-22=28. Then I use the rule of 78 to get the rebate. 22=406, 50=1,275. 406/1,275*5,380= 1,713.16. Then I divide 24,380/50=487.60. Then I started to find the final payment 487.60*28=13,652.80-1,713.16=11,939.64 which is the final payment. When I click check my work, it shows that 11,939.64 was not the payment. I got the right rebate, but I need the right answer for the final payment. I need to know what am I doing wrong ? Can someone help me.
Based on your calculations, it seems like you made an error when calculating the final payment amount. Let's go through the steps again and identify the mistake.
1. Start with the purchase price of the boat: $16,200
2. Add the down payment: $16,200 + $2,800 = $19,000
3. Add the finance charges: $19,000 + $5,380 = $24,380
4. Calculate the total number of months of the loan: 50 months
5. Determine the number of months remaining when Joanne decides to pay off the loan: 50 months - 22 months = 28 months
6. Calculate the rebate using the Rule of 78: rebate = (22/50) * finance charges = (22/50) * $5,380 = $2,364.16
7. Calculate the actual payoff amount: payoff amount = total amount owed - rebate = $24,380 - $2,364.16 = $22,015.84
So the correct answer would be:
- Rebate: $2,364.16
- Actual payoff amount: $22,015.84
Make sure to double-check your calculations and ensure that you have entered all the values correctly.