College Math Prep A - Checkpoint: Loans and Monthly Payments

Adrian agrees to a 12-month loan to pay for his $490 wakeboard. His annual interest rate is 6.3%, and his monthly payment is $42.24. After which payment will Adrian repay at least half the principal?

7

Alexei finances her purchase of a $900 television. Her one-year loan has a fixed annual interest rate of 2.5%. Which equation correctly calculates Alexei's monthly payment?

M = 900⋅0.025 / 12[1−(1+0.025/12)−12⋅1]

Kumar uses a $1,100 personal loan to start a bike repair business. He will repay the loan in monthly payments of $93.72 for 1 year at an annual interest rate of 4.1% compounded monthly. What balance remains after he makes the first payment?

$1,010.04

Shannon finances her new car with a $9,900 auto loan. The loan has a 5-year term at a fixed annual interest rate of 4.6% compounded monthly. What is Shannon's monthly auto loan payment?

$185.02

Rahul uses a $15,000 small-business loan to open a second location for his counseling practice. He will repay the loan in 4 years at a fixed annual interest rate of 5.7%. What is Rahul's monthly loan payment?

$350.22

Ruby takes a loan to pay for an international cruise. The cruise costs $3,400, and she will make monthly payments for 3 years at an annual interest rate of 5.8% compounded monthly. Ruby's amortization schedule for her first 10 payments is found in the table. For payment 10, what percentage of the payment goes toward paying the principal?

86.7%

Toni takes out a 30-year mortgage loan for $146,000. Her fixed annual interest rate is 4.3% compounded monthly. Which equation correctly calculates Toni's monthly mortgage payment?

M = 146,000⋅0.043 / 12[1−(1+0.043/12)−12⋅30]

Liv buys a new car. Her auto loan is $18,000 with an annual interest rate of 3.6% compounded monthly for 5 years. Her monthly payment is $328.26. The following table shows the first payment in the amortization schedule. How much of Liv's first payment is distributed to interest and to principal? Select the correct value for each.

interest: $54.00 principal: $274.26

What is the name for a strict guideline that defines the duration, interest rate, and other aspects of an investment?

term