Question 1

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.)

Accepted Answer

The answer of Earl Miller buys a new desk for...

Question 2

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?

Accepted Answer

A) $457,425.60 
B) $606,823.20 
C) $626,863.20 
D) $600,000.00 
E) None of these

Question 3

Calculate the monthly payment by using the loan amortization table:
$\begin{array} { l l } 
\text { Loan } & \$ 26,000 \
\text { Down Payment } & \$ 5,000 \
\text { Time } & 36 \text { months } \
\text { Rate } & 11 \%
\end{array}$

Accepted Answer

The answer of Calculate the monthly payment by using the...

Question 4

Match the following terms with their definitions.
-Finance charge

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

Question 5

A billing cycle is always 30 or 31 days.

Accepted Answer

A) True 
 B)False

Question 6

Amortization is not a payment process.

Accepted Answer

A) True 
 B)False

Question 7

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?

Accepted Answer

The answer of Vicki King bought a Ford Explorer for...

Question 8

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?

Accepted Answer

The answer of Mel Blanc bought a new dining room...

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Open credit in a revolving charge plan results in:

Accepted Answer

A) One purchase per month 
B) The U.S. Rule being applied to each purchase 
C) As many cash purchases till credit limit is reached 
D) As many charged purchases till credit limit is reached 
E) None of these

Question 11

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

Accepted Answer

A) Plus number of days in billing cycle 
B) Minus number of days in billing cycle 
C) Divided by number of days in billing cycle 
D) Multiplied by number of days in billing cycle 
E) None of these

Question 12

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

Accepted Answer

A) Plus amount financed 
B) Minus amount financed 
C) Divided by amount financed 
D) Multiplied by amount financed 
E) None of these

Question 13

The Truth in Lending Act regulates interest charges.

Accepted Answer

A) True 
 B)False

Question 14

Calculate average daily balance:
$\begin{array}{l}
29 \text { Day Billing Cycle }\
\begin{array} { l l l } 
9 / 6 & \text { Balance } & \$ 600 \
9 / 18 & \text { Payment } & \$ 200 \
9 / 24 & \text { Charge } & \$ 300
\end{array}
\end{array}$

Accepted Answer

The answer of Calculate average daily balance:
\(\begin{array}{l}
29 \text { Day...

Question 15

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:

Accepted Answer

A) 17.25% - 17.50% 
B) 17.00% 
C) 16.75% 
D) 16.50% 
E) None of these

Question 16

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

Accepted Answer

A) True 
 B)False

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: $\begin{array} { l l } \text { Loan } & \$ 26,000 \\\text { Down Payment } & \$ 5,000 \\\text { Time } & 36 \text { months } \\\text { Rate } & 11 \%\end{array}$

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: $\begin{array}{l}29 \text { Day Billing Cycle }\\\begin{array} { l l l } 9 / 6 & \text { Balance } & \$ 600 \\9 / 18 & \text { Payment } & \$ 200 \\9 / 24 & \text { Charge } & \$ 300\end{array}\end{array}$

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.