Question 1

Jim buys a car worth $20,000.He makes a down payment of $1000 and repays the balance with equal monthly payments of $450 at the end of each month for as long as is necessary.If interest on the loan is j12 = 6%,what is the outstanding balance after 24 payments have been made?

Accepted Answer

A) $9,971.66 
B) $10,153.29 
C) $11,098.82 
D) $11,262.75

Question 2

Sandy takes out a loan of $22,000 at j12 = 9%,repaid over 5 years with monthly payments.After 24 payments,the outstanding balance on the loan is $14,361.35.Just after the 24th payment,Sandy makes a lump sum payment of $3000 and refinances the loan with monthly payments for two more years at the same interest rate.What is the new monthly payment?

Accepted Answer

A) $361.29 
B) $473.39 
C) $519.04 
D) $656.09

Question 3

A company borrows $100,000 with interest at j12 = 9%.The loan is to be amortized by monthly payments of $1550 for as long as necessary.A final smaller payment will be calculated so the loan will be exactly repaid.The outstanding balance immediately after the 88th payment is $796.44.What is the value of the 89th and final payment?

Accepted Answer

A) $790.51 
B) $796.44 
C) $802.41 
D) $808.43

Question 4

A debt of $15,000 with interest at j2 = 9% is to be paid back over 15 years with semi-annual payments of $920.87.What is the outstanding balance after 18 payments using the sum of digits method? (Answer to the nearest dollar)

Accepted Answer

A) $8,397 
B) $8,933 
C) $9,166 
D) $10,697

Question 5

A $200,000 debt at j2 = 7% is being repaid over 10 years using the sinking fund method,where the sinking fund earns interest at j2 = 6%.What is the book value of the loan at the end of 6 years?

Accepted Answer

A) $105,633.26 
B) $100,655.79 
C) $94,366.72 
D) $91,315.56

Question 6

A debt is amortized at j4 = x%by payment of $300 per quarter.You are given that the outstanding balance is $6279.09 just after the kth payment and the outstanding balance is $6136.07 just after the (k+1)st payment.What is x?

Accepted Answer

A) 7.22% 
B) 10.00% 
C) 14.30% 
D) 28.88%

Question 7

A sinking fund is being accumulated at j12 = 6% by deposits of $200 per month to repay the loan of $10,000.If the book value of debt is 4605.31 just after the kth deposit,what is the book value of debt just after the (k+1)st deposit?

Accepted Answer

A) $4378.34 
B) $4383.39 
C) $4405.31 
D) $4578.34

Question 8

Jim takes out a $10,000 loan at j4 = 10%,to be paid back with quarterly payments over 5 years.At the end of 2 years,the outstanding balance is $6,580.07.At that time,Jim makes a lump sum payment of $500 and then refinances the loan at j4 = 8%.He also intends to repay the remainder of the loan over just 2 more years.What is the new quarterly payment?

Accepted Answer

A) $898.24 
B) $847.97 
C) $829.99 
D) $574.93

Question 9

A debt is amortized at j4 = x%by payments of $300 per quarter.You are given that the outstanding balance is $6279.09 just after the kth payment and the outstanding balance is $6136.07 just after the (k + 1)st payment.What is x?

Accepted Answer

A) 14.30% 
B) 7.22% 
C) 28.88% 
D) 10.00%

Question 10

A woman borrows $30,000 from a loan company to be repaid by monthly payments of $746.55 over 4 years at j12 = 9%.What is the total amount interest paid in her second and third payments using the sum of digits method?

Accepted Answer

A) $471.32 
B) $451.47 
C) $461.39 
D) $438.24

Question 11

A couple wishes to save for a down payment of $50,000 on a house.They deposit money at the end of every 3 months for 4 years into a sinking fund to achieve their goal.If the sinking fund earns interest at j12 = 6%,what quarterly deposit does the couple need to make?

Accepted Answer

A) $2786.64 
B) $2788.25 
C) $3538.25 
D) $3540.37

Question 12

The interest portion of the 9th payment of $R on an amortized loan repaid monthly is $8.42.The interest portion of the 10th payment of $R is $7.77.If interest rate is j12 = 18%.What is R?

Accepted Answer

A) $12.03 
B) $35.72 
C) $51.75 
D) $60.30

Question 13

A city issues $100,000 worth of bonds paying interest at j2 = 7%.They make semi-annual deposits in a sinking fund to pay for the redemption of the bonds.The city decides to take some risk in their investing,so it turns out that the sinking fund earns j2 = 8%.The semi-annual cost of the debt is $6,858.18.What is the book value of the debt at the end of 2 years? (Answer to the nearest dollar)

Accepted Answer

A) $70,877 
B) $71,093 
C) $85,740 
D) $85,845

Question 14

A loan of size A is to be amortized by monthly payments of $1000.The rate of interest on the loan is j12 = 18%.The outstanding balance immediately after the 4th monthly payment is $12,000.How much principal is repaid in the 12th monthly payment?

Accepted Answer

A) $923.72 
B) $914.50 
C) $910.07 
D) $896.62

Question 15

Bill takes out a loan at j4 = 6%,paid back with quarterly payments for 4.5 years.In the first payment,the principal repaid is $401.87.What is the amount of the loan? (Answer to the nearest dollar)

Accepted Answer

A) $6298 
B) $7234 
C) $8234 
D) $8358

Question 16

A loan is being amortized over n-years with monthly payments of $295.32.The rate of interest on the loan is j12 = 12%.The principal repaid in the 25th payment is $206.41.What is the size of the loan? (Answer to the nearest dollar)

Accepted Answer

A) $13,276 
B) $13,437 
C) $16,095 
D) $16,256

Question 17

A $22,500 loan is being repaid with annual payments of $4000 at the end of each year for 5 years,followed by annual payments of $2000 thereafter for as long as is needed.The interest rate is j1= 7%.What is the outstanding balance of the loan just after the 6th payment?

Accepted Answer

A) $5,153.27 
B) $7,153.27 
C) $8,763.47 
D) $10,763.47

Question 18

A loan for $15,000 is taken out from a loan company that uses the sum of digits method.It is to be paid back over 15 years with semi-annual payments of $920.87 at j2 = 9%.What is the outstanding balance of the loan after 16 payments?

Accepted Answer

A) $10,041.13 
B) $9,633.83 
C) $9,413.99 
D) $9,199.38

Question 19

A city borrows $1 million,paying semi-annual interest at j2 = 9%.The city creates a sinking fund in which semi-annual deposits of $35,360.93 are made in order to accumulate the $1 million needed to repay the loan upon maturity.The sinking fund earns j2 = 7%.What is the book value of the debt at the end of the 6 years? (Answer to the nearest dollar)

Accepted Answer

A) $231,621 
B) $483,660 
C) $516,340 
D) $768,379

Question 20

What is the interest portion of the 5th payment?

Accepted Answer

A) $614.31 
B) $570.19 
C) $582.95 
D) $575.92

Exam 5: Repayment of Debts

Jim buys a car worth $20,000.He makes a down payment of $1000 and repays the balance with equal monthly payments of $450 at the end of each month for as long as is necessary.If interest on the loan is j₁₂ = 6%,what is the outstanding balance after 24 payments have been made?

A debt of $15,000 with interest at j₂ = 9% is to be paid back over 15 years with semi-annual payments of $920.87.What is the outstanding balance after 18 payments using the sum of digits method? (Answer to the nearest dollar)

A $200,000 debt at j₂ = 7% is being repaid over 10 years using the sinking fund method,where the sinking fund earns interest at j₂ = 6%.What is the book value of the loan at the end of 6 years?

A debt is amortized at j₄ = x%by payment of $300 per quarter.You are given that the outstanding balance is $6279.09 just after the k^th payment and the outstanding balance is $6136.07 just after the (k+1) ^st payment.What is x?

A sinking fund is being accumulated at j₁₂ = 6% by deposits of $200 per month to repay the loan of $10,000.If the book value of debt is 4605.31 just after the k^th deposit,what is the book value of debt just after the (k+1) ^st deposit?

A debt is amortized at j₄ = x%by payments of $300 per quarter.You are given that the outstanding balance is $6279.09 just after the k^th payment and the outstanding balance is $6136.07 just after the (k + 1) ^st payment.What is x?

A woman borrows $30,000 from a loan company to be repaid by monthly payments of $746.55 over 4 years at j₁₂ = 9%.What is the total amount interest paid in her second and third payments using the sum of digits method?

A couple wishes to save for a down payment of $50,000 on a house.They deposit money at the end of every 3 months for 4 years into a sinking fund to achieve their goal.If the sinking fund earns interest at j₁₂ = 6%,what quarterly deposit does the couple need to make?

The interest portion of the 9^th payment of $R on an amortized loan repaid monthly is $8.42.The interest portion of the 10^th payment of $R is $7.77.If interest rate is j₁₂ = 18%.What is R?

A loan of size A is to be amortized by monthly payments of $1000.The rate of interest on the loan is j₁₂ = 18%.The outstanding balance immediately after the 4^th monthly payment is $12,000.How much principal is repaid in the 12^th monthly payment?

Bill takes out a loan at j₄ = 6%,paid back with quarterly payments for 4.5 years.In the first payment,the principal repaid is $401.87.What is the amount of the loan? (Answer to the nearest dollar)

A loan is being amortized over n-years with monthly payments of $295.32.The rate of interest on the loan is j₁₂ = 12%.The principal repaid in the 25^th payment is $206.41.What is the size of the loan? (Answer to the nearest dollar)

A $22,500 loan is being repaid with annual payments of $4000 at the end of each year for 5 years,followed by annual payments of $2000 thereafter for as long as is needed.The interest rate is j₁= 7%.What is the outstanding balance of the loan just after the 6^th payment?

A loan for $15,000 is taken out from a loan company that uses the sum of digits method.It is to be paid back over 15 years with semi-annual payments of $920.87 at j₂ = 9%.What is the outstanding balance of the loan after 16 payments?

What is the interest portion of the 5^th payment?