Loan Calculation: How Much Will You Owe in Total Without Payments?

Question:

If you have a loan for $1,000.00 at 7.65% APR where $100.00 is due monthly and there is a 2% penalty on the original amount when not paid, how much will you owe in total if nothing is paid during the year?

Answer:

The total amount owed without making any payments on a $1,000.00 loan at 7.65% APR with a penalty of 2% and $100.00 due monthly would be $1,296.50.

Explanation:

To calculate the total amount you would owe at the end of the year without making any payments on the loan, we need to consider the original loan amount, the annual percentage rate (APR), the monthly due amount, and any penalties.

The interest accrued on the loan over one year without monthly payments would be $76.50. This is calculated as $1,000.00 * 7.65%.

Additionally, there would be a penalty of $20.00, which is 2% of the original loan amount.

Furthermore, the total unpaid monthly dues over one year would amount to $1,200.00.

Therefore, the total owed at the end of the year would be $1,000.00 (original loan amount) + $76.50 (interest) + $20.00 (penalty) + $1,200.00 (unpaid dues) = $1,296.50.

It's important to note that there might be discrepancies in the provided options, as the closest answer to the calculated total is $1,096.50 in Option B, but this does not match the actual total.