Deck 12: Business and Consumer Loans

Question 1

Find the payment necessary to amortize the loan using the amortization table. Round to the nearest cent.
$1000, 10% compounded annually, 12 annual payments

A)$140.78
B)$75.84
C)$153.96
D)$146.76

Answer 1

$146.76

Question 2

Provide an appropriate response.
Explain how to use the APR Table to determine the true APR.

Answer 2

Answers will vary.

Question 3

Solve the problem using the loan payoff table or an amortization table.
A new fax machine cost Miller Ltd. $2,759. They are to pay it off in 18 months at 8% interest. What will each monthly payment be, and how much interest will they pay on the loan?

A)$164.44, $200.92
B)$124.79, $512.78
C)$163.17, $178.06
D)$126.03, $490.46

Answer 3

$163.17, $178.06

Question 4

Provide an appropriate response.
Explain how to construct a repayment schedule.

Question 5

Find the balance due on the maturity date of the note. Find the total amount of interest paid on the note. Use the United States Rule.
Principal: $8200
Interest: 10.5%
Time (days): 220
Partial payment: $3000 on day 150

A)$5102.08; $460.83
B)$5672.24; $472.24
C)$5713.71; $513.71
D)$5306.17; $464.92

Question 6

Find the balance due on the maturity date of the note. Find the total amount of interest paid on the note. Use the United States Rule.
Principal: $32,148
Interest: 11%
Time (days): 220

A)$13,214.40; $1066.40
B)$13,834.60; $1686.60
C)$14,164.50; $2016.50
D)$12,943.60; $795.60

Question 7

Find the finance charge on the revolving charge account. Assume interest is calculated on the unpaid balance of the account. Round to the nearest cent.

A)$7.98
B)$3.88
C)$4.66
D)$6.65

Question 8

Provide an appropriate response.
Explain the difference between the Amortization Table and the Loan Payoff Table.

Question 9

Provide an appropriate response.
Explain the difference between the unpaid balance method and the average daily balance method of calculating finance charges.

Question 10

Solve the problem.
The monthly payments on a $54,000 loan at interest for 20 years is $402.84. How much of the first monthly payment will go toward interest?

A)$26.18
B)$351.00
C)$292.50
D)$376.66

Question 11

Solve the problem.
A construction firm pays $5,000.00 for a new piece of equipment. It amortizes the loan for the piece of equipment in 4 annual payments at 10% Use the abbreviated amortization table to prepare an amortization schedule for this piece of equipment.

Question 12

Provide an appropriate response.
Explain why the approximate APR is not the APR that is disclosed to the borrower on an installment loan.

Question 13

Solve the problem.
An architecture firm purchases 5 new workstations for $4,000.00 each. The firm makes a down payment of $8,000.00 and amortizes the balance with monthly loan payments to the bank of 8% for 3 years. Use the abbreviated loan payoff table to prepare an amortization schedule showing the first 5 payments.

Question 14

Solve the problem. Use the approximate APR formula to estimate the APR, and round rates to the nearest tenth of a percent.
Eddie Hodges buys a complete stereo with CD for $980, paying it off at $46.19 per month for 2 years. What is the approximate APR of the loan?

A)12.6%
B)13.1%
C)11.4%
D)12.1%

Question 15

Solve the problem and use the table to find the annual percentage rate.
Eric Yu purchased a boat costing $12,900 with $800 down and loan payments of $311 per month for 48 months. Find the total installment cost and the annual percentage rate.

A)$15,728; 10.75%
B)$14,928; 10.25%
C)$14,928; 10.75%
D)$14,128; 10.25%

Question 16

Provide an appropriate response.
Explain the procedure used to determine the unearned interest using the Rule of 78.

Question 17

Provide an appropriate response.
Explain how to determine the amount of each equal monthly mortgage payment that is going toward interest and the amount going toward principal.

Question 18

Use the loan payoff table to find the monthly payment and finance charge for the loan.
Amount financed: $8,036
Number of months: 36
APR: 9%

A)$251.85, $1,030.60
B)$223.80, $20.80
C)$255.54, $1,163.44
D)$259.32, $1,299.52

Question 19

Provide an appropriate response.
Explain how the average daily balance is determined.

Question 20

Provide an appropriate response.
Explain the method used to handle a partial prepayment of a loan using the US Rule.

Question 21

Use the loan payoff table to find the monthly payment and finance charge for the loan.
Amount financed: $26,730
Number of months: 18
APR: 12%

A)$1,655.04, $3,060.72
B)$1,630.00, $2,610.00
C)$125.83, $24,465.06
D)$1,605.30, $2,165.40

Question 22

Find the unpaid balance at the end of the month for the account.
Finance rate is 1.9% on the unpaid balance. Find unpaid balance at the end of Nov.

A)$377.69
B)$407.90
C)$366.97
D)$381.55

Question 23

Find the finance charge for the following revolving charge account. Assume that interest is calculated on the average daily balance of the account.

A)$786.59
B)$78.66
C)$85.81
D)$71.51

Question 24

Find the unpaid balance at the end of the month for the account.
Finance rate is 1.5% on the unpaid balance.

A)$125.04
B)$706.56
C)$670.44
D)$688.50

Question 25

Solve the problem.
Use the average daily balance for the following credit card account to find the finance charge if interest is 1.31% per month on the average daily balance. Assume one month between billing dates.

A)$2.29
B)$3.06
C)$1.90
D)$2.36

Question 26

Find the total monthly payment including taxes and insurance for the loan. Round to the nearest cent.
Amount of loan: $222,000
Interest rate:
Term of loan: 30 years
Annual taxes: $2,775
Annual insurance: $838

A)$1,260.96
B)$1,493.22
C)$1,664.16
D)$1,562.04

Question 27

Solve the problem using the loan payoff table or an amortization table.
A real estate company borrowed $305,000 to develop some condos. It amortized the loan to pay monthly for 4 years at 8% interest. Find the amount of each monthly payment.

A)$8,350.90
B)$6,743.55
C)$7,591.45
D)$7,445.05

Question 28

Find the finance charge on the revolving charge account. Assume interest is calculated on the unpaid balance of the account. Round to the nearest cent.

A)$4.98
B)$4.84
C)$4.15
D)$5.81

Question 29

Use the real estate amortization table to find the monthly payment for the loan.
What is the monthly payment on a 15-year loan of $93,900 if the annual interest rate is 7%?

A)$727.73
B)$844.16
C)$870.45
D)$750.26

Question 30

Solve the problem. Use the approximate APR formula to estimate the APR, and round rates to the nearest tenth of a percent.
Doris White decided to get new appliances for her kitchen at a cost of $5900. She puts $700 down and will pay $137.75 per month for 48 months. Find the total installment cost, the finance charge, and the approximate annual percentage rate.

A)Total: $7312.00
Finance Charge: $1412.00
APR: 13.3%
B)Total: $6912.00
Finance Charge: $1012.00
APR: 9.7%
C)Total: $6612.00
Finance Charge: $712.00
APR: 5.9%
D)Total: $7312.00
Finance Charge: $2112.00
APR: 19.9%

Question 31

Solve the problem. Use the approximate APR formula to estimate the APR, and round rates to the nearest tenth of a percent.
Jordan wants to buy an electric guitar for $320. The music store offers to let him buy it on credit, paying only $11.14 per month for 33 months. What is the finance charge? What is the approximate annual percentage rate?

A)$58.76, 12.9%
B)$42.76, 10.8%
C)$47.62, 10.5%
D)$36.48, 8.3%

Question 32

Find the finance charge and total installment cost of the loan. Round to the nearest cent.
Amount financed: $1,114.99
Down payment: $95
Cash price: $1,209.99
Number of payments: 36
Amount of payment: $39.20

A)$201.21; $1,506.20
B)$1,411.20; $1,601.20
C)$292.61; $1,601.20
D)$296.21; $1,506.20

Question 33

Use the real estate amortization table to find the monthly payment for the loan.
What is the monthly payment on a 20-year loan of $68,400 if the annual interest rate is

A)$523.26
B)$380.30
C)$414.50
D)$432.97

Question 34

Solve the problem.
Global Transport built a new building and amortized $5,200,000 for 20 years at . Find the monthly payment.

A)$42,484
B)$31,928
C)$35,776
D)$236

Question 35

Find the unpaid balance at the end of the month for the account.
Finance rate is 1.5% on the unpaid balance.

A)$639.99
B)$595.23
C)$617.61
D)$57.03

Question 36

Solve the problem.
To produce a calculator, Cal Industries signed a note on April 2 for $86,400, due in 120 days at 14% interest. On May 5 they made a payment of $20,000, and on June 1 another of $25,000. Find the amount due on the maturity date and the interest charged.

A)$43,914.25, $2514.25
B)$44,624.45, $3164.45
C)$45,112.15, $3652.15
D)$44,226.05, $2826.05

Question 37

Solve the problem.
John Atkins can afford a mortgage payment of $850 per month (not including insurance and taxes). Given a 15-year loan at 8%, find the maximum mortgage to the nearest thousand that he can afford.

A)$89,000
B)$102,000
C)$116,000
D)$88,000

Question 38

Find the finance charge on the revolving charge account. Assume interest is calculated on the unpaid balance of the account. Round to the nearest cent.

A)$1.73
B)$2.65
C)$2.08
D)$3.18

Question 39

Find the annual percentage rate using the annual percentage rate table.
Amount Financed: $560
Finance Charge: $38.47
Number of monthly payments: 12

A)11.50%
B)11.00%
C)10.25%
D)12.50%

Question 40

Find the balance due on the maturity date of the note. Find the total amount of interest paid on the note. Use the United States Rule.
Principal: $38,400
Interest: 9.2%
Time (days): 180
Partial payment: $20,000 on day 100

A)$18,642.69; $242.69
B)$22,101.51; $3701.51
C)$19,777.57; $1377.57
D)$20,421.19; $2421.19

Question 41

Find the finance charge for the following revolving charge account. Assume that interest is calculated on the average daily balance of the account.

A)$17.39
B)$202.87
C)$20.29
D)$23.18

Question 42

Use the real estate amortization table to find the monthly payment for the loan.
What is the monthly payment on a 10-year loan of $67,400 if the annual interest rate is 6%?

A)$756.90
B)$568.86
C)$748.14
D)$482.58

Question 43

Find the finance charge and total installment cost of the loan. Round to the nearest cent.
Amount financed: $170
Down payment: $40
Cash price: $210
Number of payments: 18
Amount of payment: $10.69

A)$192.42; $272.42
B)$4.42; $272.42
C)$22.42; $232.42
D)$17.58; $232.42

Question 44

Use the real estate amortization table to find the monthly payment for the loan.
What is the monthly payment on a 25-year loan of $101,300 if the annual interest rate is ?

A)$716.19
B)$816.48
C)$708.09
D)$748.61

Question 45

Find the payment necessary to amortize the loan using the amortization table. Round to the nearest cent.
The Meyers bought a Sandwich City franchise for $500,000. They paid $100,000 of their own money and borrowed the rest, agreeing to make semiannual payments over 8 years at 8% (compounded semiannually).

A)$34,328.00
B)$65,694.92
C)$60,570.50
D)$42,910.00

Question 46

Use the loan payoff table to find the monthly payment and finance charge for the loan.
Amount financed: $11,268
Number of months: 24
APR: 13%

A)$540.98, $1,715.52
B)$535.68, $1,588.32
C)$530.38, $1,461.12
D)$441.93, $661.68

Question 47

Solve the problem.
The Smith's addition to their house is going to cost $23,150. On March 2 they sign a note at 9.5% interest due in 200 days. They make a partial payment on April 30 of $8000. What is the amount due on the maturity date? What is the amount of interest charged?

A)$15,713.71, $924.14
B)$16,087.55, $937.55
C)$16,520.23, $1370.10
D)$16,032.63, $882.63

Question 48

Solve the problem using the loan payoff table or an amortization table.
If you borrowed $5,738,447.10 at 9% interest paid monthly for 3 years, what is the amount of each payment?

A)$185,179.69
B)$182,482.62
C)$159,815.75
D)$179,842.93

Question 49

Find the finance charge and total installment cost of the loan. Round to the nearest cent.
Amount financed: $165
Down payment: $45
Cash price: $210
Number of payments: 6
Amount of payment: $28.59

A)$12.54; $261.54
B)$6.54; $216.54
C)$38.46; $216.54
D)$171.54; $261.54

Question 50

Solve the problem using the loan payoff table or an amortization table.
John Thomas bought a new car for $16,445. He paid 10% down and monthly payments for 3 years at 10%. Find the amount of each monthly payment necessary to amortize the loan and the total amount of interest paid over the 3 years.

A)$484.57, $2,644.02
B)$477.61, $2,393.46
C)$530.68, $2,659.48
D)$559.61, $5,345.46

Question 51

Find the finance charge for the following revolving charge account. Assume that interest is calculated on the average daily balance of the account.

A)$151.24
B)$15.12
C)$13.96
D)$16.29

Question 52

Find the total monthly payment including taxes and insurance for the loan. Round to the nearest cent.
Amount of loan: $79,000
Interest rate:
Term of loan: 20 years
Annual taxes: $1,539
Annual insurance: $538

A)$636.74
B)$905.41
C)$785.33
D)$809.82

Question 53

Use the real estate amortization table to find the monthly payment for the loan.
What is the monthly payment on a 30-year loan of $96,800 if the annual interest rate is 8%?

A)$710.51
B)$676.63
C)$744.39
D)$747.30

Question 54

Find the finance charge on the revolving charge account. Assume interest is calculated on the unpaid balance of the account. Round to the nearest cent.

A)$416.69
B)$38.89
C)$20.83
D)$41.67

Question 55

Find the finance charge for the following revolving charge account. Assume that interest is calculated on the average daily balance of the account.

A)$11.62
B)$13.56
C)$116.22
D)$9.69

Question 56

Find the finance charge for the following revolving charge account. Assume that interest is calculated on the average daily balance of the account.

A)$3.24
B)$2.60
C)$3.89
D)$32.44

Question 57

Find the total monthly payment including taxes and insurance for the loan. Round to the nearest cent.
Amount of loan: $96,275
Interest rate: 5%
Term of loan: 20 years
Annual taxes: $1,577
Annual insurance: $523

A)$738.21
B)$635.42
C)$837.37
D)$810.42

Question 58

Use the real estate amortization table to find the monthly payment for the loan.
What is the monthly payment on a 20-year loan of $57,600 if the annual interest rate is 8%?

A)$550.66
B)$499.97
C)$482.11
D)$464.26

Question 59

Find the total monthly payment including taxes and insurance for the loan. Round to the nearest cent.
Amount of loan: $66,500
Interest rate: 7%
Term of loan: 15 years
Annual taxes: $1,258
Annual insurance: $340

A)$648.54
B)$731.00
C)$749.62
D)$597.84

Question 60

Find the total monthly payment including taxes and insurance for the loan. Round to the nearest cent.
Amount of loan: $137,250
Interest rate: 4%
Term of loan: 25 years
Annual taxes: $2,211
Annual insurance: $627

A)$999.61
B)$724.68
C)$961.18
D)$891.18

Question 61

Solve the problem.
On June 1, the unpaid balance in an account was $213. On June 13, a payment of $35 was made. The finance charge rate was 1.5% per month of the average daily balance. Find the new balance at the end of June.

A)$180.79
B)$180.88
C)$206.80
D)$179.50

Question 62

Find the annual percentage rate using the annual percentage rate table.
Amount Financed: $540
Finance Charge: $43.90
Number of monthly payments: 18

A)11.50%
B)10.00%
C)11.25%
D)12.50%

Question 63

Find the finance charge on the revolving charge account. Assume interest is calculated on the unpaid balance of the account. Round to the nearest cent.

A)$204.46
B)$350.50
C)$408.92
D)$4,089.21

Question 64

Use the real estate amortization table to find the monthly payment for the loan.
What is the monthly payment on a 15-year loan of $101,300 if the annual interest rate is 5%?

A)$774.95
B)$668.58
C)$1,074.79
D)$801.28

Question 65

Use the loan payoff table to find the monthly payment and finance charge for the loan.
Amount financed: $60,642
Number of months: 48
APR: 8%

A)$1,509.38, $11,808.24
B)$1,480.27, $10,410.96
C)$1,340.79, $3,715.92
D)$1,660.38, $19,056.24

Question 66

Solve the problem.
The Habers purchase a $7000 living room set, putting $500 down and agreeing to pay $350.50 each month for 2 years. After 14 payments, they decide to pay off the note. How much is saved in interest? How much is needed to pay the balance of the loan?

A)$353.37, $3152.13
B)$357.65, $3147.85
C)$351.71, $3153.79
D)$350.53, $3154.47

Question 67

Solve the problem.
The monthly payments on a $50,000 loan at 7% interest for 25 years is $353.50. How much of the first monthly payment will go toward the principal?

A)$61.83
B)$328.76
C)$291.67
D)$24.75

Question 68

Solve the problem.
The March 1 unpaid balance in an account was $190. On March 7, a payment of $75 was made. The finance charge rate was 1.7% per month of the average daily balance. Find the new balance at the end of March.

A)$117.14
B)$117.20
C)$116.70
D)$137.02

Question 69

Use the loan payoff table to find the monthly payment and finance charge for the loan.
Amount financed: $251,075
Number of months: 36
APR: 11%

A)$8,338.20, $49,100.20
B)$9,611.15, $94,926.40
C)$8,102.19, $40,603.84
D)$8,220.20, $44,852.20

Question 70

Find the approximate annual percentage rate using the approximate annual percentage rate formula. Round to the nearest tenth of a percent.
Amount financed: $17,200
Finance charge: $3,546
Number of monthly payments: 48

A)5.0%
B)39.6%
C)10.1%
D)20.6%

Question 71

Find the finance charge for the following revolving charge account. Assume that interest is calculated on the average daily balance of the account.

A)$229.78
B)$21.21
C)$22.98
D)$24.75

Question 72

Solve the problem.
The Best Company ordered $8327 worth of jewelry on credit on September 8, the note due in 90 days at 11% interest. On November 10 they made a partial payment of $2000. Find the amount due on the maturity date, and the total interest charged on the note.

A)$6540.81, $213.81
B)$6767.23, $430.23
C)$660.14, $293.14
D)$6718.51, $391.51

Question 73

Solve the problem. Use the approximate APR formula to estimate the APR, and round rates to the nearest tenth of a percent.
Maria Perez bought a washer-dryer combination on sale for $450, charging it to her card and agreeing to pay $40.51 per month for one year. Find the approximate annual percentage rate for this loan.

A)14%
B)15.8%
C)16%
D)14.8%

Question 74

Find the payment necessary to amortize the loan using the amortization table. Round to the nearest cent.
$50,000, 10% compounded annually, 26 annual payments

A)$5,508.40
B)$5,458.00
C)$5,412.88
D)$4,612.95

Question 75

Solve the problem. Use the approximate APR formula to estimate the APR, and round rates to the nearest tenth of a percent.
To help plow driveways, Joe Burk purchased a small tractor with a snowplow for $1800. He agreed to pay $90.44 per month for 22 months when he charged it. What is the approximate annual percentage rate?

A)11.5%
B)12.0%
C)11.0%
D)10.5%

Question 76

Using the Rule of 78, find the amount of unearned interest for the loan paid in full before the date of maturity. Round to the nearest cent.
Finance charge: $6,761
Total number of payments: 48
Remaining number of payments, when paid in full: 11

A)$379.44
B)$395.59
C)$316.20
D)$329.66

Question 77

Solve the problem and use the table to find the annual percentage rate.
An appliance store offers a refrigerator for $1,200 with no down payment, $145.68 in finance charges and 24 equal payments. Find the annual percentage rate.

A)11.00%
B)11.25%
C)10.75%
D)11.50%

Question 78

Solve the problem.
The monthly payments on a $98,000 loan at interest for 15 years is $909.44. How much of the first monthly payment will go toward the principal?

A)$68.21
B)$841.23
C)$296.94
D)$612.50

Question 79

Using the Rule of 78, find the amount of unearned interest for the loan paid in full before the date of maturity. Round to the nearest cent.
Finance charge: $747
Total number of payments: 24
Remaining number of payments, when paid in full: 8

A)$69.72
B)$97.43
C)$75.78
D)$89.64

Question 80

Using the Rule of 78, find the amount of unearned interest for the loan paid in full before the date of maturity. Round to the nearest cent.
Finance charge: $9,325
Total number of payments: 61
Remaining number of payments, when paid in full: 35

A)$3,210.25
B)$2,934.10
C)$3,106.69
D)$3,031.90