Econ final test finance&econ interest

Econ 325 Spring 2020 Final Exam Part B Due Date: Thursday, May 14 at 11:30 pm on D2L Exam Format • There are 5 problems on the exam (each problem is worth 20 points). • There 100 points on the exam. Exam Rules • This exam is open notes. • You are allowed to access information on D2L while taking this exam. • You may use a calculator on this exam. • No collaboration, sharing answers, or copying work is allowed during the exam. • There is no time limit on the exam as long as the exam is submitted by the due date and due time. Academic Integrity Rules • Students must work by themselves once they have started the exam. • Students may not communicate with someone else (on exam material) once they start taking the exam. • Students may not communicate with other students who have started their exams (or started and finished their exams) before taking their exams. Submission Rules • Write your answers in Word (or Pages) document or on paper. • When done, save your Word file as a PDF or scan your paper answers to a PDF. • You must explain your answers for full credit. • You may resubmit work up until the due date and time.

1. Suppose that you buy new furniture that costs $5,200, but you need to take out a loan. The furniture store can give you a loan. Suppose you take out a 24-month loan with a 8.25% add-on rate per year.

(a) What are your monthly payments? (b) What is the total interest you will pay after you have finished paying off your

loan? (c) What will your balance be after you have made 12 payments?

2. Suppose you bought a house and you borrowed $355,000 for 360 months at a fixed 0.302% monthly interest rate (you have an actuarial loan).

(a) What is your initial loan payment? (b) After 159 months (and therefore 159 payments), how many payments

remain? (c) After 159 payments, what is your loan balance? (d) After 159 payments, by how much has your initial loan balance fallen? (e) After 159 payments, how much interest have you paid so far?

3. Suppose that you buy new kitchen appliances (i.e. equipment) for your home that costs a total of $3,600 but you need to have a loan. The store can give you a loan. You take out a 18-month loan with a 6.25% discount per year. (a) What are your monthly payments? (b) How much do you still owe after 12 payments? (c) What is the total interest you will pay after you have finished paying off your loan?

4. Suppose you wish to buy a house and you borrow $340,000 for 360 months at a 0.406% monthly interest rate with an actuarial loan. (a) What your monthly payment? (b) What is the total interest you pay if you make all 360 payments over the

30-year period?

5. Suppose you wish to buy a car and the most you can pay is $400 a month. (a) If you take a 72-month loan, your monthly interest rate is 0.75%. What is the

most you can pay to buy a new car? (b) If you take a 48-month loan, your monthly interest rate is 0.50%. What is the

most you can pay to buy a new car?