finance charge
Dave borrowed $950 for one year and paid $52.50 in interest. The bank charged him a $4.50 service charge. What is the finance charge on this loan?
2. Rebecca wants to buy a new saddle for her horse. The one she wants usually costs $600, but this week it is on sale for $550. She does not have $550, but she could buy it with $60 down and pay the rest in 6 months with 9 percent interest. How much will Rebecca save by buying the saddle this week?
3. You can buy an item for $135 on a charge with the promise to pay $135 in 90 days. Suppose you can buy an identical item for $132 cash. If you buy the item for $135, you are in effect paying $3 for the use of $132 for three months. What is the effective annual rate of interest? Ignore interest rate compounding.
4. Dave borrowed $600 on January 1, 2006. The bank charged him a $5.00 service charge and interest was $44.20. He paid the $600 in 12 equal monthly payments, what was the APR?
5. Sidney took a $200 cash advance by using checks linked to her credit card account. The bank charges a 3 percent cash advance fee on the amount borrowed and offers no grace period on cash advances. Sidney paid the balance in full when the bill arrived.
(a)
What was the cash advance fee? (Omit the “$” sign in your response.)
Cash advance fee
$ 6
(b)
What was the interest for one month at an 12 percent APR? (Omit the “$” sign in your response.)
Interest
$
(c)
What was the total amount she paid? (Omit the “$” sign in your response.)
Total amount
What are the interest cost and the total amount due on a six-month loan of $1,800 at 14.4 percent simple annual interest?
Interest cost
$
Total amount due
After visiting several automobile dealerships, Richard selects the used car he wants. He likes its $13,900 price, but financing through the dealer is no bargain. He has $2,500 cash for a down payment, so he needs an $11,400 loan. In shopping at several banks for an installment loan, he learns that interest on most automobile loans is quoted at add-on rates. That is, during the life of the loan, interest is paid on the full amount borrowed even though a portion of the principal has been paid back. Richard borrows $11,400 for a period of four years at an add-on interest rate of 10 percent.
What is the total interest on Richard’s loan? (Do not round your intermediate calculations. Round your answer to the nearest dollar amount. Omit the “$” sign in your response.)
Total interest
$
(b)
What is the total cost of the car? (Do not round your intermediate calculations. Round your answer to the nearest dollar amount. Omit the “$” sign in your response.)
Total cost
$
(c)
What is the monthly payment? (Do not round your intermediate calculations. Round your answer to 2 decimal places. Omit the “$” sign in your response.)
Monthly payment
$
(d)
What is the annual percentage rate (APR)? (Do not round your intermediate calculations. Round your answer to 2 decimal places. Omit the “%” sign in your response.)
Annual percentage rate
%
