Chapter 22 Test Review Sheet

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1.  Sun National Bank of New Jersey is offering a 4.75% fixed discounted student loan to be repaid in monthly installments over the course of 4 years. You expect that you will need a total of $100,000 for your educational expenses. How much should you borrow (round your answer to the nearest whole dollar)? 

2.  Fred wanted to watch the Super Bowl in style, so he charged a $4,999.99 50-inch widescreen plasma HDTV with a built-in digital video recorder to his Sam's Club credit card. The company charges 0.93% interest per month. If Fred made no payment for one year and just let the balance ride, how much interest would he have accrued in the first year (round your answer to the nearest whole dollar)?

3. An Illinois criminal justice professor found eight times as many gambling addicts among college students as among adults. Ignoring the warnings of this professor, Erik, a college junior, went to the Argosy's Alton Belle Casino. Unfortunately, Erik's personality was such that he became addicted. Within the month, Erik had already borrowed $7,500 to support his habit. A judge gave Erik 4 months to find a job and pay off his debt. Assuming Erik deposited each monthly paycheck into an account that paid 2.65% interest per year, how much would Erik need to deposit each month to comply with the judge's order (round your answer to the nearest whole dollar)?

4. Home Savings and Loan of Ohio offers a 15-year fixed home mortgage rate of 4.15% compounded monthly. You borrow $130,000 to build your dream home. How much interest will you have paid on the loan at the end of 15 years (round your answer to the nearest whole dollar)? 

5. Suppose that you have borrowed $800 from your older brother to purchase textbooks for the new term. Your brother agreed to lend you the money provided that you pay him within 20 weeks at a rate of 1.2% interest per week. How much are your weekly payments?


6. You have decided to purchase a used 2005 Porsche 911 Carrera two door coupe with a gray leather interior and manual transmission from Valley M Motors, Inc., for $63,950. Yahoo! Finance is offering a 36-month loan at 4.12% interest compounded monthly for the state of Ohio. What is your monthly payment (round your answer to the nearest whole dollar)?

7. Which type of rate takes into account monthly compounding?
 
8. Gerard and his fiancée are looking for a $150,000 home. They find a bank that is offering a 30-year 4.03% fixed mortgage rate provided they make a down payment of 20%. Gerard and his fiancée bring home a combined weekly amount, after deductions, of $880.51. Which statement best describes how Gerard and his fiancée can afford to buy this home?
 A. They can make the monthly payments with sufficient money left over for necessities.
 B. They can make the monthly payments but will have little money left for necessities.
 C. Between the two incomes, they cannot meet the monthly payment.

9. Sam and Connie built their home in 1984 for $110,000. At that time, they had a 30-year mortgage at an 8.5% fixed interest rate. Sam and Connie sold their home in 2005 exactly 21 years after it was built. How much equity did they have in the loan?


10.  Let's assume that in question 9, along with paying down their initial loan of $110,000 from the bank, their home's value appreciated to $202,400 by the time they decide to sell in 2005.  How much equity did they have in the home?


11. James, a college professor, is retiring at 65 with $507,845.43 in his STRS life income annuity. The STRS retirement specialist told James that he will receive $15 per month for every $1,000. According to the Social Security Administration, ones life expectancy at age 65 is about 16.6 years. If James lives exactly that long, how much (total) can he expect to receive?