Name
MGF 1107 Test #3
Find the missing quantity by using the simple interest formula.
1) 𝑖 =? , 𝑝 = $4000, 𝑟 = 3% 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟, 𝑡 = 8 𝑚𝑜𝑛𝑡ℎ𝑠
2) 𝑖 = $375, 𝑝 = $2500, 𝑟 = 6% 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟, 𝑡 =?
1) _____________
2) _____________
In Exercises 3 and 4, Catherine Smith borrowed $10000 from a bank for 36 months. The rate of simple interest charged is
4.5%.
3) How much interest did she pay for the use of the money?
3) _____________
4) What is the amount she repaid to the bank on the due date of the loan?
4) _____________
In Exercises 5 and 6, John received a loan of $7500 with interest at 8.25% for 90 days on October 1. John made a
payment of $3500 on November 1.
5) How much did he owe the bank on the date of maturity?
5) _____________
6) What total amount of interest did he pay on the loan?
In Exercises 7 and 8, compute the amount and the compound interest.
Principal
Time
Rate
Compounded
7)
$8500
2 years
6%
Semiannually
8)
$2500
3 years
7%
Quarterly
6) _____________
7) _____________
8) _____________
In Exercises 9-11, a new car sells for $25,000. To finance it through a bank the bank will require a down payment of 15%
and monthly payments of $520 for 48 months.
9) How much money will the purchaser have to borrow from the bank?
9) _____________
10) What finance charge will the purchaser have to pay the bank?
10) _____________
11) What is the APR?
11) _____________
In Exercises 12-14, Cloe borrowed $8000. To repay the loan, she was scheduled to make 48 monthly installment
payments of $180.80. Instead of making her 24th payment, Cloe decides to pay off the loan.
12) Determine the APR of the installment loan.
12) _____________
13) How much interest will Cloe save (use the actuarial method)?
13) _____________
14) What is the total amount due to pay off the loan?
14) _____________
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MGF 1107 Test #3
In Exercises 15-19, Teresa’s credit card statement shows a balance due of $935.79 on June 22, the billing date. For the
period ending on July 22, she had the following transactions.
June 27
July 1
July 2
July 4
July 15
Charge: Groceries
Charge: Clothing
Charge: Restaurant Bill
Payment
Charge: Groceries
$55.27
$124.53
$43.21
$300.00
$79.00
15) Determine the finance charge on July 22 by using the unpaid balance method. Assume
that the interest rate is 1.3% per month.
15) _____________
16) Determine the new account balance on July 22 using the finance charge found in (15).
16) _____________
17) Determine the average daily balance for the period.
17) _____________
18) _____________
18) Determine the finance charge on July 22 by using the average daily balance method.
Assume that the interest rate is 1.3% per month.
19) Determine the new account balance on July 22 using the finance charge found in (18).
19) _____________
In Exercises 20-27, the Blake’s decide to build a new house. The contractor quoted them a price of $250,000, including
the lot. The taxes on the house would be $6200 per year, and the homeowners’ insurance would cost $500 per year.
They have applied for a conventional loan from the bank. The bank is requiring a 20% down payment, and the interest
rate is 7% with 2 points. The Blake’s annual income is $155,000. They have more than 10 monthly payments remaining
on the following: $350 for a car, $275 on a college education loan, and $150 on a new patio. Their bank will approve a
loan that has a total monthly mortgage payment of principal, interest, property taxes, and homeowners’ insurance that
is less than or equal to 27% of her adjusted monthly income.
20) What is the required down payment?
20) _____________
21) Determine the amount paid for points?
21) _____________
22) Determine 27% of their adjusted monthly income?
22) _____________
23) Determine the monthly payments of principal and interest for a 25-year loan.
23) _____________
24) Determine their total monthly payments, including homeowners’ insurance and taxes.
24) _____________
25) Do the Blake’s meet the requirements for the mortgage?
25) _____________
26) Determine the total cost of the house (excluding the homeowners’ insurance and taxes)
26) _____________
after 25 years.
27) _____________
27) How much of the total cost is interest, including points?
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MGF 1107 Test #3
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MGF 1107 Test #3
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