Solve the problem.
-The Habers purchase a $7000 living room set, putting $500 down and agreeing to pay $350.50 each month for 2 years. After 14 payments, they decide to pay off the note. How much is saved in interest? How much is needed to pay the balance of the loan?

Question

Quizplus · Accepted Answer

The total cost of the living room set with monthly payments for 2 years (24 months) is $350.50 * 24 = $8,412. The initial down payment was $500, so the financed amount is $8,412 - $500 = $7,912. After 14 payments, the amount paid is $350.50 * 14 = $4,907. The remaining balance is $7,912 - $4,907 = $3,005. The interest saved by paying off early is the total interest minus the interest included in the 14 payments, which is $8,412 (total payments) - $7,000 (original price) - $3,005 (remaining balance) = $407. The correct remaining balance to pay off the loan is $3,005, but since none of the provided choices exactly match this calculation and the interest saved calculation seems to have been misunderstood in the question setup, the closest match considering the structure of the problem and common mistakes in calculation is option D, acknowledging an error in the initial calculation process.

Solve the Problem. -The Habers Purchase a $7000 Living Room Set, Putting $500