You are considering prepaying an installment loan you took out several months ago. The lender has provided you with the following information
remaining months to pay 10
loan payoff $851.29
monthly payments $95.
00
balance due in last month of the loan $95.00
remaining interest on the loan $98.71
You believe you can earn an annual after-tax rate of rate of 16% on your investments in each of the next ten months (1.33% a month). Given the above information, you should
A)
prepay the loan; your net gain will be about $35.62.
B)
not prepay the loan; your net gain will be about $35.62.
C)
prepay the loan; your net gain will be about $14.80.
D)
not prepay the loan; your net gain will be about $14.80.
A
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