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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?
Suggested Answer: B
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15 comments · newest first
FA
Fabiola
3 months ago
I’m not sure, but I think it could be option A too.
AL
Alesia
3 months ago
I agree, that seems reasonable with the extra Rs20.
MA
Mammie
3 months ago
I’m leaning towards option B, 2.81 months.
JO
Jodi
3 months ago
I feel like I need to use a formula for this.
ED
Edna
3 months ago
I think it’s about calculating the impact of extra payments.
VA
Valda
4 months ago
This question is tricky!
CL
Claribel
4 months ago
So, which option is the right answer?
SA
Sang
4 months ago
Totally agree, every little bit helps!
JU
Judy
4 months ago
Wait, can you really pay it off that much faster?
RO
Rodolfo
6 months ago
Increasing payments by Rs20 is a smart move!
LI
Lili
6 months ago
The loan amount is Rs8500 at 7% interest.
LO
Louisa
6 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.
MA
Magnolia
6 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.
MA
Marcos
7 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.
VE
Venita
7 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.