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Business Math Chapter Test 15
In an ordinary annuity the interest on a yearly investment starts building interest At the end of the first period An annuity due can use the ordinary annuity table if one extra period is added and Subtract one payment from total value Payments in annuities must be made Annually, semi annually, or quarterly The present value of an ordinary annuity Indicates how much money needs to be invested today A sinking fund Aids in meeting a future obligation Ted Williams made deposits of $500 at the end of each year for eight years. The rate is 8% compounded annually. The value of Ted's annuity at the end of eight years is (use the tables in the handbook): $5318.31 Nancy Billows promised to pay her son $600 quarterly for four years. If Nancy can invest her money at 6% in an ordinary annuity, she must invest how much today? (Use the tables in the handbook.) $8,478.72 Joe Sullivan invests $9,000 at the end of each year for 20 years. The rate of interest Joe earns is 8% annually. The final value of Joe's investment at the end of the 20th year on this ordinary annuity is $411,857.68 At the beginning of each year, Bill Ross invests $1,400 semiannually at 8% for nine years. The cash value of the annuity due at the end of the ninth year is $37,339.18 Jones Co. borrowed money that is to be repaid in 12 years. So that the loan will be paid back at end of the 12th year, the company invests $8,000 at end of each year at 5% compounded annually. The amount of the original loan was $127,336.80 Amount financed is equal to Cash price- down payment The finance charge is equal to the total of all monthly payments Minus amount financed The APR represents the True effective annual rate of interest charged by seller Most companies calculate the finance charge on credit card accounts as a percentage of the Average daily balance In calculating the daily balance, cash advances are Added in Mia Lane bought a high-definition television for $7,500. Based on her income, she could afford to pay back only $600 per month. There is 1 ½% monthly interest charge on the unpaid balance. The U.S. Rule is used in the calculation. At the end of month 1, the balance outstanding is $7,012.50 Chapter Tests 01 02 03 04 05
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Ed Sloan bought a new Explorer for $22,000. He put down $7,000 and paid $290 for 60 months. The total finance charge to Ed is $2400 John Sullivan bought a New Brunswick boat for $17,000. He made a $2,500 down payment on it. The bank's loan was for 60 months. Finance charges totaled $4,900. His monthly payment is $323.33 Amanda Chin purchased a home for $296,000; she put 20% down with a mortgage rate of 6% for 30 years. What is Amanda's monthly payment? $1,420.80 Megan Mei is charged 2 points on a $120,000 loan at the time of closing. The original price of the home before the down payment was $140,000. The points in dollars cost Megan 2400 The total cost of interest is equal to the total of all monthly payments Minus amount of mortgage The difference between the monthly payments on a $120,000 home at 6 ½% and at 8% for 25 years is $115.20 Stu Reese has a $150,000 7 ½% mortgage. His monthly payment is $1,010.10. His first payment will reduce the principal to an outstanding balance of $149,927.40 An amortization schedule shows Portion of payment broken down to interest and principal Bill Moore took out an $80,000 mortgage on a ski chalet. The bank charged 4 points at closing. The points in dollars cost Bill: $ 3,200 Jill Diamond bought a home for $190,000 with a down payment of $65,000. The rate of interest was 7% for 35 years. Her monthly mortgage payment is $798.75 Lizzy Clar bought a home for $160,000, putting down $30,000. The rate of interest is 7% for 25 years. The total yearly mortgage payment is $11,029.20 Joe Jay purchased a new colonial home for $260,000, putting down 20%. He decided to use Loyal Bank for his mortgage. They were offering a 6 1/2% for a 25-year mortgage. The principal after the first payment had a balance outstanding of $207,720.59 |
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