Artemis took out a 30-year loan from her bank for $190,000 at an apr of
9.6%, compounded monthly. if her bank charges a prepayment fee of 6
months' interest on 80% of the balance, what prepayment fee would artemis
be charged for paying off her loan 16 years early?
o
a. $5822.42
o
b. $7390.60
o c. $6182.58
o d. $7382.56

The prepayment fee of $6182.58 would  be charged to Artemis for paying off her loan 16 years early.

Option C

Step-by-step explanation:

30 year loan at 9.6% interest yields.  

Number of month = 30 (12) = 360 months

Annual percent interest of = monthly percent interest of .8%

The formula for the present value of an ordinary annuity, as opposed to an annuity due, is as follows

With r and n adjusted for periodicity, where

P = the present value of an annuity stream

PMT = the dollar amount of each annuity payment

r = the interest rate (also known as the discount rate)

n = the number of periods in which payments will be made

                   PMT = $1611.50 per month

Her loan 16 year early. It means

Worth of monthly payments for 14 year

Amount still owed after 14 year = difference of the above two

                                                    =$724641.16 - $566825.18

                                                    =$157816.01

Prepayment fee =

                         = 126252.82 (1.049-1) = 126252.82 (1.0489-1) = $6182.63