AAFM CWM_LEVEL_2 Exam - Topic 4 Question 114 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 114
Topic #: 4

Section B (2 Mark)

You borrowed Rs8500, with the understanding that you are to make monthly payments over 36 months. Interest is charged at 7% compounded monthly. If you were to increase your payments by Rs20 per month, how much less time would it take you to pay back the loan?

A2.49 months

B2.81 months

C3.28 months

D1.55 months

Show Suggested Answer

Suggested Answer: B

by Hyun at Apr 08, 2026, 03:47 AM

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Rodolfo

1 month ago

Increasing payments by Rs20 is a smart move!

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Lili

1 month ago

The loan amount is Rs8500 at 7% interest.

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Louisa

2 months ago

I think the answer might be around 2.81 months, but I need to double-check my formulas for the monthly compounding part.

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Magnolia

2 months ago

This seems familiar! I feel like I’ve seen options like these before, but I’m not confident in my calculations for the time saved.

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Marcos

2 months ago

I think I recall that increasing payments can significantly reduce the loan term, but I’m a bit confused about how to apply the compounding interest here.

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Venita

2 months ago

I remember we practiced a similar question about loan repayments, but I’m not sure how to calculate the exact time reduction with the extra payment.

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