Mike,



Name Answer Key for review sheet Chapter 5 Re-Test on 2-26-14

Using bankers days and exact days, please calculate simple interest for the following:

Bankers Days Exact Days

Interest Interest

1. $3,600.00 at 5.25 % for 60 days $31.50 $31.07

2. $9,640.00 at 13 ¾ % for 220 days $810.03 $798.93

Find the due date for each of the following notes. (Assume February has 28 days.)

Date Issued Time Due Date

May 31 6 months Nov. 30th

April 14 84 days July 7th

Find the number of days from Number of Days

January 15 to March 18 62

March 23 to July 27 136

3. A prepayment penalty of .9% interest must be paid on a loan that has a balance of $4,224.07. What is the final payment?

$4,224.07 * .009 = $38.02

$4,224.07 + $38.02 = $4,262.09

$4,262.09

4. Ben borrowed $550 from a finance company and repaid the loan in 24 monthly payments of $25.40 each. What was the finance charge?

$25.40 * 24 = $609.60

$609.60 - $550 = $59.60

$59.60

5. Brenda has a 2-year, $2,500 car loan at 8 ¾ %. After paying on the loan for 3 months, Brenda has a balance of $2,411.46. She decides to pay off the loan with the next payment. How much will she have to pay?

$2,411.46 * .0875 * 1/12 = $17.58

$17.58 + $2,411.46 = $2,429.04

$2,429.04

6. Calculate the exact interest from June 2 to August 15 on $6,800 at 7%.

June 2 – Aug 15 = 74 days...

$6,800 * .07 * 74/365 = $96.50

$96.50

7. Joe borrowed $5,900 at 7 ½% for 28 months, a.) How much interest was he charged AND b.) How much did he have to pay after the 28 months?

$5,900 * .075 * 28/12 = $1,032.50

$1,032.50 + $5,900 = $6,932.50

$1,032.50; $6,932.50

8. John signs a three-month note for $4,600 bearing exact interest at 12 ½ % per year. How much must he repay after the three months?

$4,600 * .125 * 3/12 = $143.75

$143.75 + $4,600 = $4,743.75

$4,743.75

9. Paula borrowed $10,450 at 8.5% for 4 years. Her monthly payment was $296.13. She did not pay off the loan early. How much did she pay back to the lender?

$296.13 * 48 = 14,214.24

$14,214.24

10. Rhonda can buy a sofa TV for $3,600 cash or pay $300.00 down and 24 monthly installments of $150.00. What is her installment price of the TV, AND by what percent would her installment price be greater than the cash price? (Do not round the percentage)

Cash = $3,600

Installment Price = $300 +$3,600 (24 * 150)= $3,900

$3,900 - $3,600 = $300/$3,600 = .083...8.3%

$3,900; 8.3%

11. Sue Smith paid $562.50 interest on a loan of $18,000 for 6 months. Find the rate of interest she paid. (Round to the nearest tenth of a percent)

$562.50 = $18,000 * 6/12 * R

$562.50 = $9,000R

$562.50/$9,000 = .0625 ....6.3%

6.3%

12. The installment price of a set of water skis is $240. You must pay $60 down and make payments for 18 months. What will your monthly payment be?

$240 – $60 = $180/18 = $10

$10.00

13. Veronica could buy a computer for $2,600 or purchase it on an installment plan with $300 down and $72.20 a month for 36 months. What is the finance charge she would pay by buying it on the installment plan?

Cash = $2,600

Installment Price = 300 + $2,599.20 ($72.20 * 36) = $2,899.20 – 2,600 = $299.20

$299.20

14. Hector borrowed $2,400 on a one-year simple interest installment loan at 12% interest. The monthly payments were $218.24. Find the amount of applied to interest, amount applied to the principal and the new balance for the first two months.

| |Applied Interest |Applied Principal |New Balance |

|Month 1 |$24 |$194.24 |$2,205.76 |

|Month 2 |$22.06 |$196.18 |$2,009.58 |

15. Vern took out a $5,000 simple interest loan at 6% interest for 24 months to buy a car. His monthly payment is $221.60 After making payments for 12 months, his balance is $2,588.79. He decides to pay the loan off with his next payment. How much interest did Vern Goode save by paying off his loan early? (hint…what should he have paid versus what did he pay)

Should have paid = 5,318.40

Final payment = 12.94 + 2,588.79 = $2,601.73

Already paid = 221.60* 12 = $2,659.20 + final payment = $5,260.93

Saved = 5,318.40 – $5,260.93 = $57.47

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This question is worth double.

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