loan
Aaron Carson of Bishop, California, obtained a two year installment loan for $1500 to buy some furniture eight months ago. The loan had a 12.6 percent APR and a finance charge of $204.72. His monthly payment is $71.03. Aaron has made eight monthly payments and now wants to pay off the remainder of the loan. The lender will use the rule of 78s method to calculate a prepayment penalty.
(a) How much will Aaron need to give the lender to pay off the loan?
(b) What is the dollar amount of the prepayment penalty on this loan?