Use the actuarial method to find the payoff amount for the loan paid in full before its due date.
-Regular Monthly Payment: $417.31 APR: 12%
Remaining Payments After Payoff: 36

Question

Quizplus · Accepted Answer

The actuarial method for calculating the payoff amount involves finding the present value of the remaining payments. The formula for the present value of an annuity is P = PMT × [(1 - (1 + r)^-n) / r], where PMT is the monthly payment, r is the monthly interest rate (APR/12), and n is the number of remaining payments. Here, PMT = $417.31, APR = 12% (so, r = 0.12/12 = 0.01), and n = 36. Plugging these into the formula gives P = $417.31 × [(1 - (1 + 0.01)^-36) / 0.01] ≈ $12,981.63.

Use the Actuarial Method to Find the Payoff Amount for the Loan