Question 1

Average daily balance is equal to sum of daily balances divided by number of days in the billing cycle.

Accepted Answer

A) True 
 B)False

Question 2

Pete Sole bought a used car for $8,000. Pete put down $2,000 and financed the balance at10$\frac {\text { 1 }} { \text { 2} }$% for 60 months. What is his monthly payment? (Use the loan amortization table.)

Accepted Answer

The answer of Pete Sole bought a used car for...

Question 3

Calculating APR by table lookup requires that the total amount financed be divided by the interest charge and then multiplied by 100.

Accepted Answer

A) True 
 B)False

Question 4

Match the following terms with their definitions.
-APR

Accepted Answer

A) Total of all payments minus amount financed 
B) Effective interest rate 
C) A payment process 
D) A revolving charge account 
E) Sum of daily balance divided by number of days in billing cycle
F)Total of all monthly payments plus down payment
G)Used in calculation of average daily balance
H)Doesn't dictate interest rates
I)Cash price minus down payment
J)Used to calculate rebate of finance charge
K)Purchase till maximum credit reached
L)Initial cash payment 
A) Total of all payments minus amount financed 
B) Effective interest rate 
C) A payment process 
D) A revolving charge account 
E) Sum of daily balance divided by number of days in billing cycle
F)Total of all monthly payments plus down payment
G)Used in calculation of average daily balance
H)Doesn't dictate interest rates
I)Cash price minus down payment
J)Used to calculate rebate of finance charge
K)Purchase till maximum credit reached
L)Initial cash payment

Question 5

APR cannot be calculated by use of tables.

Accepted Answer

A) True 
 B)False

Question 6

Calculate the finance charge:
 $$\begin{array} { | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Sofa } \
\text { purchase } \
\text { price }
\end{array} & \text { Down } & \begin{array} { l } 
\text { Number of } \
\text { monthly } \
\text { payments }
\end{array} & \begin{array} { l } 
\text { Amount of } \
\text { monthly } \
\text { payments }
\end{array} \
 & \text { Payment } & \text { payments } \
\hline \$ 1,600 & \$ 400 & 12 & \$ 190 \
\hline
\end{array}$$

Accepted Answer

The answer of Calculate the finance charge:
 \[\begin{array} { |...

Question 7

Calculate the average daily balance (assume a 30-day billing cycle):
$\begin{array} { l l l } 
4 / 20 & \text { Billing Date Previous Balance } & \$ 700 \
4 / 26 & \text { Payment } & \$ 200 \
4 / 30 & \text { Charge } & \$ 400 \
5 / 4 & \text { Payment } & \$ 150 \
5 / 12 & \text { Cash Advance } & \$ 180
\end{array}$

Accepted Answer

The answer of Calculate the average daily balance (assume a...

Question 8

Joanne Revis bought a home computer for $1,299. She plans to pay $300 per month till the purchase is paid off. Assume there is1$\frac {\text {1  }} { \text {2 } }$%
 a interest charge on the unpaid balance and the U.S. Rule is used. What is the outstanding balance due at the end of the first month?

Accepted Answer

The answer of Joanne Revis bought a home computer for...

Question 9

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:

Accepted Answer

A) $6,012.50 
B) $5,012.50 
C) $4,012.50 
D) $3,012.50 
E) None of these 
A) $6,012.50 
B) $5,012.50 
C) $4,012.50 
D) $3,012.50 
E) None of these

Question 10

Match the following terms with their definitions.
-Open-end credit

Accepted Answer

A) Total of all payments minus amount financed 
B) Effective interest rate 
C) A payment process 
D) A revolving charge account 
E) Sum of daily balance divided by number of days in billing cycle
F)Total of all monthly payments plus down payment
G)Used in calculation of average daily balance
H)Doesn't dictate interest rates
I)Cash price minus down payment
J)Used to calculate rebate of finance charge
K)Purchase till maximum credit reached
L)Initial cash payment 
A) Total of all payments minus amount financed 
B) Effective interest rate 
C) A payment process 
D) A revolving charge account 
E) Sum of daily balance divided by number of days in billing cycle
F)Total of all monthly payments plus down payment
G)Used in calculation of average daily balance
H)Doesn't dictate interest rates
I)Cash price minus down payment
J)Used to calculate rebate of finance charge
K)Purchase till maximum credit reached
L)Initial cash payment

Question 11

Revolving charge accounts must be paid off completely by the end of the month.

Accepted Answer

A) True 
 B)False

Question 12

The Fair Credit and Charge Card Disclosure Act of 1988 is optional advice to credit card companies.

Accepted Answer

A) True 
 B)False

Question 13

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:

Accepted Answer

A) $15,000 
B) $17,400 
C) $2,400 
D) $4,200 
E) None of these 
A) $15,000 
B) $17,400 
C) $2,400 
D) $4,200 
E) None of these

Question 14

Jane Ranch bought a tractor for $5,000. Jane has decided that she can afford to pay only $1,000 per month. Can you calculate at the end of month 2 the balance of the loan outstanding? Use the U.S. Rule. The monthly interest charged is 5% on the unpaid balance.

Accepted Answer

The answer of Jane Ranch bought a tractor for $5,000....

Question 15

Match the following terms with their definitions.
-Amortization

Accepted Answer

A) Total of all payments minus amount financed 
B) Effective interest rate 
C) A payment process 
D) A revolving charge account 
E) Sum of daily balance divided by number of days in billing cycle
F)Total of all monthly payments plus down payment
G)Used in calculation of average daily balance
H)Doesn't dictate interest rates
I)Cash price minus down payment
J)Used to calculate rebate of finance charge
K)Purchase till maximum credit reached
L)Initial cash payment 
A) Total of all payments minus amount financed 
B) Effective interest rate 
C) A payment process 
D) A revolving charge account 
E) Sum of daily balance divided by number of days in billing cycle
F)Total of all monthly payments plus down payment
G)Used in calculation of average daily balance
H)Doesn't dictate interest rates
I)Cash price minus down payment
J)Used to calculate rebate of finance charge
K)Purchase till maximum credit reached
L)Initial cash payment

Question 16

The APR represents the:

Accepted Answer

A) Stated rate of interest 
B) True effective quarterly interest rate charged by seller 
C) True effective annual rate of interest charged by buyer 
D) True effective annual rate of interest charged by seller 
E) None of these 
A) Stated rate of interest 
B) True effective quarterly interest rate charged by seller 
C) True effective annual rate of interest charged by buyer 
D) True effective annual rate of interest charged by seller 
E) None of these

Question 17

Calculate the finance charge:
$\begin{array} { l l } 
\text { Loan } & \$ 16,500 \
\text { Months of loan } & 36 \
\text { Monthly payment } & \$ 535.00
\end{array}$

Accepted Answer

The answer of Calculate the finance charge:
\(\begin{array} { l l...

Question 18

The daily balance is the previous balance plus cash advances plus purchases minus any payments.

Accepted Answer

A) True 
 B)False

Question 19

When using Table 14-2 to calculate the monthly payment, first divide the loan amount by $100.

Accepted Answer

A) True 
 B)False

Question 20

Pete Frank bought a computer for $4,000. Pete put down $500 and financed the balance at 10 ½% for 36 months. What is his monthly payment? (Use loan amortization table.)

Accepted Answer

The answer of Pete Frank bought a computer for $4,000....

Exam 14: Installment Buying

Average daily balance is equal to sum of daily balances divided by number of days in the billing cycle.

Pete Sole bought a used car for $8,000. Pete put down $2,000 and financed the balance at10 1 2\frac {\text { 1 }} { \text { 2} } 2 1 ​ % for 60 months. What is his monthly payment? (Use the loan amortization table.)

Calculating APR by table lookup requires that the total amount financed be divided by the interest charge and then multiplied by 100.

Match the following terms with their definitions. -APR

APR cannot be calculated by use of tables.

Calculate the finance charge: Sofa purchase price Down Number of monthly payments Amount of monthly payments Payment payments \ 1,600 \ 400 12 \ 190

Calculate the average daily balance (assume a 30-day billing cycle): 4/20 Billing Date Previous Balance \ 700 4/26 Payment \ 200 4/30 Charge \ 400 5/4 Payment \ 150 5/12 Cash Advance \ 180

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:

Match the following terms with their definitions. -Open-end credit

Revolving charge accounts must be paid off completely by the end of the month.

The Fair Credit and Charge Card Disclosure Act of 1988 is optional advice to credit card companies.

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:

Jane Ranch bought a tractor for $5,000. Jane has decided that she can afford to pay only $1,000 per month. Can you calculate at the end of month 2 the balance of the loan outstanding? Use the U.S. Rule. The monthly interest charged is 5% on the unpaid balance.

Match the following terms with their definitions. -Amortization

The APR represents the:

Calculate the finance charge: Loan \ 16,500 Months of loan 36 Monthly payment \ 535.00

The daily balance is the previous balance plus cash advances plus purchases minus any payments.

When using Table 14-2 to calculate the monthly payment, first divide the loan amount by $100.

Pete Frank bought a computer for $4,000. Pete put down $500 and financed the balance at 10 ½% for 36 months. What is his monthly payment? (Use loan amortization table.)

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Promissory Notes, Simple Discount Notes, and the Discount Process

Compound Interest and Present Value

Annuities and Sinking Funds

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

Life, Fire, and Auto Insurance

Stocks, Bonds, and Mutual Funds

Business Statistics

Filters

Pete Sole bought a used car for $8,000. Pete put down $2,000 and financed the balance at10 $\frac {\text { 1 }} { \text { 2} }$ % for 60 months. What is his monthly payment? (Use the loan amortization table.)