Solve the Problem Using the Rule of 78

question 140

Multiple Choice

Solve the problem using the rule of 78.
-Dallas Wright took out a 48-month fixed installment loan of $6250 to purchase a new all-terrain vehicle (ATV) . He began making monthly payments of $212.50. Instead of making his 28th
Payment, Dallas decides to repay his loan in full. How much interest will Dallas save?

• A)$1821.43
• B)$665.34
• C)$32.25
• D)$705.36

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Definitions:

Base Amount

The initial sum of money used as a reference or starting point for calculations, often related to financial calculations or transactions.

Sources of Cash

Various origins from which a business or individual can obtain funds, including operations, financing, and investing activities.

Use of Cash

Describes the various ways a company or an individual applies their available cash, including operations, investments, and financing activities.

Price/Earnings Ratio

A valuation metric that compares a company's current share price to its per-share earnings, often used to gauge if a stock is over or undervalued.