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Question 1117963: 1.Marina had an accident with her car and the repair bill came to $800. She didn’t have any emergency fund money and no extra money in her monthly budget, so she ended up borrowing from a pay-day loan company. As long as she can pay the loan back at the end of the 30 day period she won’t be charged any interest, technically. However, she did have to pay an $19 processing fee per $100 that she borrowed. If she were to consider the processing fee to represent interest paid in her formula, what would she discover to be the annual interest rate she was charged on her short term loan?
2.The end of the month has arrived and Marina was only able to save up $150 to pay off her pay-day loan of $800. This means she will have to delay payment on the remaining $650 until next month. Besides the delayed payment fee that she is charged, she will now have to pay interest on the remaining amount. The APR (annual percentage rate) is 47%, but the interest is compounded daily. What is the effective interest rate that Marina will actually be paying?
3.It took her 9 more months but Marina has managed to save the full $650 plus more to cover fees to pay off the pay-day loan company. However, she forgot to account for the interest that had been compounding over time. Considering it is now 275 days later, the remaining loan was $650 and the APR is 47% compounded daily, what is the total amount that Marina must now pay in order to pay off her the loan, accounting for interest?
4.Tony is saving up to go travelling after graduation. How much will he have if he can put $100 at the beginning of every month, for the full four years he is in school, into his savings account which earns 1.9% interest?
5.Anna also wants to travel after graduation but she isn’t working while in school so she won’t be able to put money aside regularly. However, her grandmother gave her the generous gift of $2500 for her birthday and suggested she invest it in a GIC because it’s low risk. She shopped around and found a 4 year GIC investment that earns 2.2% interest annually. How much will Anna have at the end of her four year investment?
6.Anna was pretty disappointed with how little money she would have and so she started looking at other investment options that might involve higher risk but would also offer more possible return. Her bank’s financial advisor suggested a mutual fund the she said was only moderately risky but had a record of 11.5% annual return. Assuming the mutual fund preformed as well as it has in the past, how much would Anna’s investment of $2500 potentially be after 4 years if she decided to go with this option?
7.Belle, who has just started her first full-time salary job is determined to have $1 million in her account by the time she retires. She is now 25 and hopes to retire at 65 years of age. Her investments have been earning 5.25% annual return and she thinks it’s realistic that can be maintained. How much would Belle have to put aside each month, in order to reach her goal?
8.Aya and Harumi would like to buy a house and their dream house costs $500,000. They have $50,000 saved up for a down payment but would still need to take out a mortgage loan for the remaining $450,000 and they’re not sure whether they could afford the monthly loan payments. The bank has offered them an interest rate of 3.5%, compounded monthly. How much would they have to be able to afford to pay each month in order to pay off their mortgage in 25 years?
9.What if Aya and Harumi could only afford a monthly payment of $1,600? What would be the maximum mortgage amount they could afford to borrow from the bank, if all the other conditions were the same?
10.Victor just turned 16, got his first-level driver’s license, and is now excited about buying his own car. His parents want help him buy his first car, but also to encourage him to save money so they have offered to match his weekly savings with weekly compound interest of 30%. Victor figures he can put aside $80 each week from what he earns at his part time job. How much money will he have saved up by the time he turns 18, has his full license, and is hoping to by the car?
11 Ishan and Hazel plan to retire at age 60 with a retirement income of $48,000 a year from their savings. Rather than pay themselves the whole amount at the beginning of each year, they have decided that payment at the beginning of each quarter of $12,000 gives them the right balance of flexibility and maximized interest earnings. They feel they can safely earn an interest rate of 5%, compounded quarterly, on their money and they are budgeting based on the prediction that they will live until they are 90 years old. How much money will they have to have saved by the time they are 60 in order to reach their retirement goal?
12.By the time Stephan graduated school he had an OSAP loan of $23,000. The interest charged on the loan is about 4.5% which is compounded monthly. Stephan has decided he had better focus on getting the loan paid off as quickly as possible to save paying a lot of extra money in interest. He set for himself the goal of paying off the loan in 3 years. What would Stephan’s monthly loan payments have to be in order to achieve his goal?
13.Stephan realizes that payment amount is not manageable based on how much he currently makes and all of the other expenses he also has to budget for. As a result he decides paying off his loan in 8 years is simply more realistic. What would Stephan’s monthly loan payments be with this new timeline?
14.Hak Young is tired at the end of the semester and decides he really needs a break so he pays for a one week all-inclusive trip to Disney Land with his credit card. In total the trip cost $3000 and his credit card charges 22% interest compounded monthly. He doesn’t expect that he will have the money to pay off his credit card until he graduates and is working full time which will be at least another 18 months. How much will Hak Young's trip have truly cost him by the time he can start to pay it off?
15 Hak Young has gone on to accumulate other credit card debt on top of what he owes from his Disney Land vacation and his total debit is now $13,764.82. He is getting worried about his debt and is determined to pay it off completely. With all conditions of the account being the same as before, what would Hak Young’s minimum payment have to be in order to pay off his debt in 5 years?
Answer by ikleyn(52765)   (Show Source):
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