Question

Carmine took out a 28-year loan for $151,000 at an APR of 9.9%, compounded monthly, while Richie took out a 28-year loan for $116,000 at an APR of 9.9%, compounded monthly. Who would save more by paying off his loan 17 years early?

Answer 1

The correct answer is:

Carmine would save more, since he has $35,000 more in principle!

I JUST TOOK THE TEST!!!!

Answer 2

Carmine would save more money by paying off her loan 17 years earlier than Richie would save. Both persons have the same initial term (28 year) and rate (9.9%) which is compounded monthly. But cutting the term by 17 years Carmine would save significantly more on her higher principal loan term rate principal interest 28 0.099 151,000 418572 10 0.099 151,000 149490 269082 28 0.099 116,000 321552 10 0.099 116,000 114840 206712