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1. How many more monthly payments are made for a 5-year loan than for a 2-year loan?

2. How many monthly payments are made for a 2 ½ year loan?

3. Bart needs to borrow $7,000 from a local bank. He compares the monthly payments for 9.75% loan for three different periods of time.

a. What is the monthly payment for a 1-year loan?

b. What is the monthly payment for a 3-year loan?

c. What is the monthly payment for a 5-year loan?

d. How much money does he save in interest by using a 3 year loan rather than a 5 year loan?

4. Rachel has a $10,000, 3-year loan with an APR of 7.25%.

a. What is her monthly payment?

b. What is the total amount of her monthly payments?

c. What is her finance charge?

5. Melissa want to check the accuracy of the finance charge on her promissory note. She has a $6,000, 4-year loan at an APR of 10%.

a. What is the monthly payment?

b. What is the total amount of her monthly payments?

c. What is the finance charge?

d. How much money would Melissa save if she went to a 3-year loan at 8%?

6. The policy of Broadway Pawnshop is to lend up to 35% of the value of the borrower’s collateral. Johan wants to use a $3,000 ring and a $1,200 necklace as collateral for the loan. What is the maximum amount that he could borrow from Broadway?

7. Juliana is taking out an $8,700, 3.5 year loan with an APR of 9.31%. What will be the monthly payment for this loan?

8. If you can save money on interest by going to a loan with a lower interest rate for less year, then why would you take a loan at a higher interest rate for more years?

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