(1) Borrowing = $ 15500, Tenure = 5 years or 60 months and Interest Rate = 8.5 % per annum
Applicable Monthly Rate = 8.5 / 12 = 0.7083 %
Let the monthly payment be P1
Therefore, 15500 = P1 x (1/0.007083) x [1-{1/(1.007083)^(60)}]
15500 = P1 x 48.74164
P1 = 15500 / 48.74164 ~ $ 318
Total Amount Paid = 318 x 60 = $ 19080.2
New Tenure = 4 years or 48 months, Let the monthly payments be P2
Therefore, 15500 = P2 x (1/0.007083) x [1-{1/(1.007083)^(48)}]
15500 = P2 x 40.57105
P2 = 15500 / 40.5705 = $ 382.0458 ~ $ 382.05
Total Amount Paid = 382.05 x 48 = $ 18338.2
New Tenure = 3 years or 36 months, Let the monthly payments be P3
Therefore, 15500 = P3 x (1/0.007083) x [1-{1/(1.007083)^(36)}]
15500 = P3 x 31.6783
P3 = 15500 / 31.6783 = $ 489.2939 ~ $ 489.29
Total Amount Paid = 489.29 x 36 = $ 17614.44
As the number of payments decrease, the monthly payments increase.
Hence, the correct option is (A)
NOTE: Please raise separate qeuries for solutions to the remaining unrelated questions, as one query is restricted to the solution of only one complete question with upto 4 sub-parts.
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