Mathematics for Business and Personal Finance

Chapter 8: Loans

Practice Tests

1
Leon Franklin obtains a $1,000 loan to purchase a new color laser printer. His interest rate is 5.5% exact interest for 120 days. How much interest does Leon owe?
A)$18.08
B)$18.33
C)$18.63
D)$55.00
2
Carrie McLaughlin's bank granted her a single-payment loan of $8,200 for 90 days to pay for new merchandise in her toy store. Determine the maturity value of the loan if the rate is 6% ordinary interest.
A)$8,321.32
B)$8,323.00
C)$8,569.00
D)$8,692.00
3
Louis Jarvis purchased a new home theater system costing $1,200 and financed it at 8% exact interest for 120 days. What is the maturity value of the loan?
A)$1,231.56
B)$1,232.00
C)$1,296.00
D)$1,324.00
4
ALGEBRA Lien Chen took out a single-payment loan for $2,300.00 at 6.25% ordinary interest to pay her federal income tax bill. If the loan's maturity value is $2,317.97, when would Lien have to pay back the loan if she took it out on April 1?
A)April 30
B)May 15
C)May 20
D)May 30
5
The Browns are buying a new living room set for $1,875. They made a down payment of $250 and financed the rest. How much did the Browns finance?
A)$250
B)$1,625
C)$1,875
D)$2,125
6
Lance Costello purchased photography equipment for $4,200 with a $1,000 down payment. How much did he finance?
A)$2,200.00
B)$3,200.00
C)$4,200.00
D)$5,200.00
7
Amanda Bryan purchased a used car for $12,875 with a 25% down payment. What amount did she finance?
A)$3,000.00
B)$3,218.75
C)$9,656.25
D)$9,875.00
8
Carl and Irene Danos are purchasing a new washer and dryer for $975 with an installment loan that as an APR of 12%. The store financing requires a 10% down payment and 12 monthly payments. What is the monthly payment?

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A)$86.58
B)$77.92
C)$59.48
D)$10.98
9
Use the table from problem 8. Chris and Carol Gower purchased a $5,200 swimming pool. The down payment is 15%, and the installment loan has an APR of 10% for 24 months. What is the finance charge?
A)$203.76
B)$239.72
C)$470.24
D)$553.28
10
ALGEBRA Compute the monthly payment on an installment loan using the formula.

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p = principal (amount of loan)
r = rate per payment (APR divided by number of payments per year)
n = number of payments required to pay off the loan

Kenji Hadi obtained a $3,200 installment loan at an APR of 9%. He must repay the loan in 36 months. Find the monthly payment.
A)$31.41
B)$81.64
C)$101.76
D)$110.23
11
Kathleen O'Rourke obtained a home improvement loan of $2,000 at 10% for 12 months. The monthly payment is $175.80. What portion of the first payment is toward principal?
A)$8.79
B)$16.67
C)$159.13
D)$167.01
12
Diane and Wayne Scott obtained a $4,000 loan to purchase a tractor at 8% for 12 months. The monthly payment is $348.00. What is the new principal after they make the first payment?
A)$3,678.67
B)$3,652.00
C)$3,628.64
D)$321.33
13
Bernice Delgado obtained a $7,000 loan to purchase an outdoor building at 9% for 24 months. The monthly payment is $319.90. What is the new principal after they make the first payment?
A)$6,678.12
B)$6,680.10
C)$6,732.60
D)$6,973.75
14
Luke Benedictine obtained a $5,000.00 loan to update his office at 8% for 24 months. The monthly payment is $226.00. The balance of the loan after 16 payments is $1,758.30. What is the interest for the 17th payment?
A)$10.49
B)$11.72
C)$33.33
D)$214.28
15
Maria Thompson paid for a shipment of action figures with a $4,000 installment loan at 10% for 24 months. Her monthly payments are $184.40. After 6 payments, the balance is $3,074.51. She pays off the loan when the next payment is due. What is the final payment?
A)$3,048.89
B)$3,074.51
C)$3,100.13
D)$3,110.13
16
Walter Lane took out a simple interest loan of $3,000 at 10% interest for 18 months. After four payments the balance is $2,530.20. He pays off the loan when the next payment is due. What is the interest?
A)$14.06
B)$21.09
C)$140.57
D)$253.02
17
Stan Hardwick paid for tuition at a local college with an installment loan of $3,000 at 8% for 12 months with a $261 monthly payment. After 6 payments the balance was $1,529.68. He paid off the loan with the next payment. What is the amount of savings by paying the loan off early?
A)$10.20
B)$26.12
C)$31.18
D)$1,470.32
18
Raymond Gundy obtained a $1,200 installment loan to buy a snow blower. The finance charge is $98.16, and he will repay the loan in 18 monthly installments. What is the APR?

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A)10.00%
B)10.25%
C)10.50%
D)11.00%
19
Stella Daniels took a 6-month loan of $700 to buy pottery supplies. The finance charge is $22.82. What is the APR?
A)11.00%
B)10.75%
C)10.50%
D)10.25%
20
ALGEBRA You can compute the APR on an installment loan by using the formula:

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m = number of payments per year
f = finance charge
n = number of scheduled payments
a = amount financed

Regina Lopez obtained a $1,400 installment loan to buy a new dining room table. The finance charge is $61.60. She agreed to repay the loan in 12 monthly payments. To the nearest hundredth of a percent, what is the annual percentage rate?
A)7.95%
B)8.01%
C)8.09%
D)8.25%
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