Entrepreneurship and Small Business Management

Simple Interest Installment Loans

When you obtain a simple interest installment loan, you must pay finance charges for the use of the money. Usually you repay the amount financed plus the finance charge in equal monthly payments. The amount of each monthly payment depends on the amount financed, the number of payments, and the annual percentage rate (APR). The annual percentage rate is an index showing the relative cost of borrowing money.

1.		Monica obtained an installment loan of $1700 to purchase new furniture. The annual percentage rate is 12%. She must repay the loan in 18 months. What is her monthly payment?
			A)	$103.70
			B)	$170.20
			C)	$100.25
			D)	$127.92
2.		In problem 1, what is the total amount Monica will repay?
			A)	$1804.50
			B)	$1872.10
			C)	$1795.40
			D)	$1866.60
3.		In problem 1, what is the finance charge?
			A)	$104.50
			B)	172.10
			C)	$166.60
			D)	$95.40
4.		Pablo obtains an installment loan of $2500 to purchase computer equipment for his office. The annual percentage rate is 18%, and Pablo must repay the loan in 30 months. What is the monthly payment?
			A)	$104
			B)	$102
			C)	$110
			D)	$117
5.		In problem 4, what is the total amount Pablo will repay?
			A)	$3300
			B)	$3120
			C)	$3060
			D)	$3000
6.		In problem 4, what is the finance charge?
			A)	$570
			B)	$620
			C)	$617
			D)	$500
7.		Harold and Molly Rahla are purchasing a refrigerator with an installment loan that has an APR of 15%. The fridge sells for $729.99. They make a down payment of 20% and then will make 6 monthly payments. How much is their down payment?
			A)	$152
			B)	$137.99
			C)	$147.19
			D)	$146
8.		In problem 7, what amount will Harold and Molly finance?
			A)	$582.80
			B)	$592
			C)	$583.99
			D)	$616.70
9.		In problem 7, what will be Harold and Molly's monthly payment?
			A)	$98.73
			B)	$89.73
			C)	$101.61
			D)	$120.25
10.		In problem 7, what will Harold and Molly pay in finance charges?
			A)	$25.67
			B)	$17.66
			C)	$26.86
			D)	$30.07
11.		In problem 7, what would Harold and Molly's monthly payment be if they had a 12-month loan?
			A)	$75.64
			B)	$68.99
			C)	$72.46
			D)	$52.73
12.		In problem 7, what would Harold and Molly pay in finance charges if they had a 12-month loan?
			A)	$25.67
			B)	$48.77
			C)	$57.39
			D)	$42.31
13.		Madelyn obtains an installment loan to purchase a used car for $3,230. She agrees to repay the loan in 24 months at an APR of 18%. What is Madelyn's monthly payment?
			A)	$167.18
			B)	$176.81
			C)	$161.18
			D)	$116.81
14.		If Henry's monthly payments on his loan are $203.88 and he agrees to pay the loan off in 36 months, what is the total amount he will repay?
			A)	$7,280.35
			B)	$8,323.50
			C)	$5,892.40
			D)	$7,339.68
15.		Jamaar obtains a 12-month loan for $1360 to make some improvements in his used CD store. The APR is 10%. What is Jamaar's monthly payment?
			A)	$119.54
			B)	$113.33
			C)	$124.59
			D)	$117.62
16.		In problem 15, what is the total amount Jamaar will repay on his loan?
			A)	$1,360
			B)	$1,434.48
			C)	$1,390.57
			D)	$1,440.27
17.		In problem 15, what is the finance charge?
			A)	$80.27
			B)	$74.48
			C)	$0.00
			D)	$30.57
18.		Hope is purchasing a new entertainment center that costs $3289.95. She makes a down payment of 50% and agrees to pay the rest with an 18-month loan at an APR of 12%. How much is Hope's loan?
			A)	$1,559.60
			B)	$1,679.24
			C)	$1,644.98
			D)	$1,650.97
19.		In problem 18, what will Hope's monthly payment be?
			A)	$110.04
			B)	$97.64
			C)	$103.44
			D)	$100.34
20.		In problem 18, what will be Hope's finance charge?
			A)	$161.14
			B)	97.64
			C)	$110.04
			D)	$152.69