Chapter 5 Financial Planning Problems

Matthew Ramirez

BNF-102-098WB

Prof. Deane

18 February 2022

1. A few years ago, Simon Powell purchased a home for $220,000. Today, the home is worth $300,000. His remaining mortgage balance is $100,000. Assuming that Simon can borrow up to 80 percent of the market value, what is the maximum amount he can borrow?

5. Joshua borrowed $1,00 for one year and paid $100 in interest. The bank charged him a $10 service charge. What is the finance charge on this loan?

6. In problem 5, Joshua borrowed $1,00 on January 1, 2021, and paid it all back at once on December 31, 2021. What was the APR?

7. If Joshua paid the $1,000 in 12 equal monthly payments in problem 5, what is the APR?

10. What are the interest cost and the total amount due on a six-month loan of $1,500 at 13.2 percent simple annual interest?