Interest (no payments made) : 10000(1.0075)^60 - 10000
Interest (payments made) : 207.59 * 60 - 10000
Difference is what Dave lost over the 60 months.
Hi! Can you please help me with this problem? Thank you in advance!!!
Dave has a student loan of $10,000 on January 1, 2000. The loan has an interest rate of 9% per year compounded monthly. Instead of paying off the loan, Dave places a bundle of money in his sock drawer. After 5 years he removes all the money and pays of the loan.
The bank recommended that Dave pay the bank $207.59 a month to pay off the loan in 5 years. How much money does Dave lose each month by adopting his sock option plan?