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

question 48

Multiple Choice

Use the actuarial method to find the payoff amount for the loan paid in full before its due date.
-Amount Financed: $11,000 Regular Monthly Payment: $231.02
Total Number of Payments scheduled: 60
Loan repaid in full instead of making: 30th payment

• A)$6219.09
• B)$6147.37
• C)$6047.60
• D)$6378.39

---

Definitions:

Factored Accounts Receivable

The process of selling accounts receivable to a third party at a discount to quickly generate cash and reduce risk of non-payment.

Commission

A fee paid for services, usually a percentage of the total cost, to an agent or employee for facilitating or completing a sale.

Factoring Transaction

A financial transaction where a business sells its accounts receivable to a third party (the factor) at a discount.