Answer:
option B is correct, i.e. $412.79
Step-by-step explanation:
Loan tenure = 30 years = 30x12 = 360 months.
Loan amount = $140,000.
With a better credit rating, rate of interest = 8%/12 = 1/150 = 0.0067
With a better credit rating, Monthly payments would be:-
[tex]Pmt = \frac{PV*\;r}{[1-(1+r)^{-N}] } \\\\Pmt = \frac{140,000*\;0.0067}{[1-(1+0.0067)^{-360}] } \\\\Pmt = \$1,027.27[/tex]
As a result of Bankruptcy, rate of interest = 12%/12 = 1/100 = 0.01
With a better credit rating, Monthly payments would be:-
[tex]Pmt = \frac{PV*\;r}{[1-(1+r)^{-N}] } \\\\Pmt = \frac{140,000*\;0.01}{[1-(1+0.01)^{-360}] } \\\\Pmt = \$1,440.06[/tex]
The excess payment = $1440.06 - $1027.27 = $412.79
Hence, option B is correct, i.e. $412.79
