Solve the Problem Using the Rule of 78s

question 139

Multiple Choice

Solve the problem using the rule of 78s.
-Caroline Jones took out a 48-month fixed installment loan of $21,000 to open a restaurant. She Began making monthly payments of $533.75. Carolineʹs business does better than expected and Instead of making her 27th payment, Caroline decides to repay her loan in full. What is the total
Amount due to pay off the balance?

• A) $10,835.00
• B) $10,348.64
• C) $11,022.34
• D) $10,301.25

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Definitions:

Null Hypothesis

A statement in hypothesis testing that suggests there is no significant difference or effect, serving as the default assumption to be tested against.

First-Order Autocorrelation

A statistical measure that tests the extent to which current values in a time series are correlated with their immediate preceding value, indicating a lag-1 autocorrelation.

Durbin-Watson Statistic

A quantitative method utilized for detecting autocorrelation in the residuals resulting from regression analysis.

Critical Values

Specific points on the scale of a test statistic beyond which we reject the null hypothesis in hypothesis testing.