Cheri took out a loan for $14,350. the loan term was 3 years and cheri’s payments were $625.77 per month. since cheri had filed for bankruptcy several years prior, she ended up paying a higher interest rate. with a better credit rating, her payments could have been $431.21 per month. how much more in interest did cheri end up paying for her loan because of her bankruptcy?
a.
$5,836.80
b.
$2,334.72
c.
$8,624.16
d.
$7,004.16
the answer is d

Per month payment of Cheri = $625.77

So, total payments made in 3 years =

As mentioned, Cheri had filed for bankruptcy several years prior, she ended up paying a higher interest rate. With a better credit rating, her payments could have been $431.21 per month.

So, If she would have paid 431.21 per month for 3 years, in total she would have paid =

Hence, Cheri paid = more

So, Cheri paid option D = $7004.16 more.

required rate of return = 0.166 = 16.6%

step-by-step explanation:

under the capital asset pricing model (capm), the required or expected rate of return for a particular security or asset is given using the formula:

required rate of return = risk-free rate + beta*(market risk premium)

we are given that;

risk-free rate = 4% = 0.04

beta = 1.4

market risk premium = 9% = 0.09

we simply plug these values into the above formula;

required rate of return = 0.04 + 1.4*(0.09)

required rate of return = 0.04 + 0.126

required rate of return = 0.166 = 16.6%

1. perpendicular

2. parallel

3. perpendicular