Exam 14: Installment Buying

Earl Miller buys a new desk for $2,600. Miller will pay back $270 per month. Monthly interest is 5% on the unpaid balance. Calculate the balance outstanding after the second payment. (Use the U.S. Rule.)

Jen purchased a condo in Naples, Florida, for $699,000. She put 20% down and financed the rest at 5% for 35 years. What are Jen's total finance charges?

Calculate the monthly payment by using the loan amortization table: Loan \ 26,000 Down Payment \ 5,000 Time 36 months Rate 11\%

Match the following terms with their definitions. -Finance charge

A billing cycle is always 30 or 31 days.

Amortization is not a payment process.

Vicki King bought a Ford Explorer for $23,000. Vicki made a down payment of $6,000 and paid $305 monthly for 60 months. What is the total finance charge that Vicki paid at the end of 60 months?

Mel Blanc bought a new dining room set for $6,600. Mel put down $1,000 and financed the balance at 12% for 36 months. Using the loan amortization table, what is his monthly payment?

Finance charge equals total of all monthly payments minus amount financed.

Open credit in a revolving charge plan results in:

The average daily balance is equal to the sum of daily balances:

The finance charge is equal to the total of all monthly payments:

The Truth in Lending Act regulates interest charges.

Calculate average daily balance: 29 Day Billing Cycle 9/6 Balance \ 600 9/18 Payment \ 200 9/24 Charge \ 300

Given: $140.10 per month; cash price $5,600; down payment $0 Cash or trade months with bank-approved credit; amount financed $5,600 Finance charge $2,806 Total payments $8,406 (Use the tables in the handbook.)The APR by table lookup is:

Today most companies calculate the finance charge on their credit card accounts as a percentage of the yearly balance.