A $60,000 loan is paid back over 10 years with monthly payments of $790.18 at j₁₂ = 9.918%.What is the outstanding balance of the loan after 4 years using the sum of digits method? (Answer to the nearest dollar)You are given: Total interest = $34,821.12.

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The sum of digits method, also known as the Rule of 78s, is a way of allocating the interest portion of a loan's payments towards the early payments more than the later ones. To find the outstanding balance after 4 years (or 48 months) for a 10-year loan, we first calculate the sum of the digits for the total loan term. For a 10-year term, the sum of the digits from 1 to 10 (1+2+3+...+10) equals 55. The interest portion for each year is then allocated based on the reverse order of these digits. After 4 years, 6 years of payments remain, corresponding to the sum of the digits 6+5+4+3+2+1 = 21. The proportion of the total interest that has been paid off after 4 years is therefore 34 (the sum of the first 4 years' digits) out of 55, leaving 21/55 of the interest to be allocated over the remaining term. The outstanding balance is the original loan amount plus the remaining interest to be paid. Given the total interest is $34,821.12, the remaining interest is (21/55) * $34,821.12 = $13,288. The outstanding balance after 4 years is the original loan amount minus the principal paid, which can be calculated as the total payments made minus the interest portion paid. However, without the direct calculation of principal paid, we use the given options and the understanding that the outstanding balance includes remaining principal and interest to be paid, leading to the selection of the closest option based on the provided calculation method and given information.

A $60,000 Loan Is Paid Back Over 10 Years with Monthly