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6.1-6.2 Quiz

6.1-6.2 Quiz
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  • 1. Finding the Term of the Loan and Proceeds

    Use the partially completed promissory note for a recreational vehicle (RV) loan. Find the term of the loan and the loan proceeds.

    • Worked-Out Solution

      The term of the loan is 60 months or 5 years.

      The loan proceeds are $100,000.

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      ____       ___       _____   __   __   _    _   
     |  _ \\    / _ \\    / ___//  \ \\/ // | |  | || 
     | |_| ||  | / \ ||   \___ \\   \ ` //  | |/\| || 
     | .  //   | \_/ ||   /    //    | ||   |  /\  || 
     |_|\_\\    \___//   /____//     |_||   |_// \_|| 
     `-` --`    `---`   `-----`      `-`'   `-`   `-` 
                                                      
    
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  • 2. Finding the Monthly Payment

    Use the partially completed promissory note for a recreational vehicle (RV) loan. What is the monthly payment?

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      ______   __   __   ______    _    _     _____   
     /_   _//  \ \\/ // |      \\ | || | ||  /  ___|| 
     `-| |,-    \ ` //  |  --  // | || | || | // __   
       | ||      | ||   |  --  \\ | \\_/ || | \\_\ || 
       |_||      |_||   |______//  \____//   \____//  
       `-`'      `-`'   `------`    `---`     `---`   
                                                      
    
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  • 3. Finding the Amount Due and Cost of Credit

    Use the partially completed promissory note for a recreational vehicle (RV) loan. Find the total amount due and the cost of credit.

    • Worked-Out Solution

      The monthly payment is

      This implies that the total paid during the 5 years is

      So, the cost of credit is

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      _  __    _____    _____     _    _             
     | |/ //  |  ___|| |  __ \\  | || | ||     ___   
     | ' //   | ||__   | |  \ || | || | ||    /   || 
     | . \\   | ||__   | |__/ || | \\_/ ||   | [] || 
     |_|\_\\  |_____|| |_____//   \____//     \__ || 
     `-` --`  `-----`   -----`     `---`       -|_|| 
                                                `-`  
    
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  • 4. Last Payment

    Use the partially completed promissory note for a recreational vehicle (RV) loan. The first payment is due March 1, 2011. When is the last payment due?

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               __   __    _____      ___      ______  
      ____     \ \\/ //  |__  //    / _ \\   /_____// 
     |    \\    \ ` //     / //    / //\ \\  `____ `  
     | [] ||     | ||     / //__  |  ___  || /___//   
     |  __//     |_||    /_____|| |_||  |_|| `__ `    
     |_|`-`      `-`'    `-----`  `-`   `-`  /_//     
     `-`                                     `-`      
    
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  • 5. Remaining Balance

    The graph shows the decreasing balance of the loan. When is the remaining balance about one-fourth of the original loan amount?

    • Worked-Out Solution

      From the graph, it appears that the balance of the loan will be about $25,000 (a quarter of the original amount) after 47 payments.

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      _  __   __   __   _____      _____   __    __  
     | |/ //  \ \\/ // |  __ \\   |  ___|| \ \\ / // 
     | ' //    \ ` //  | |  \ ||  | ||__    \ \/ //  
     | . \\     | ||   | |__/ ||  | ||__     \  //   
     |_|\_\\    |_||   |_____//   |_____||    \//    
     `-` --`    `-`'    -----`    `-----`      `     
                                                     
    
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  • 6. Automatic Monthly Payments

    The credit union offers Raja a 0.25% reduction in the APR by initiating automatic monthly payments from his checking account. How much does he save over the term of the loan by doing this?

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       _____   __   __   _    _      ___     __   __  
      / ___//  \ \\/ // | || | ||   / _ \\   \ \\/ // 
      \___ \\   \ ` //  | || | ||  | / \ ||   \   //  
      /    //    | ||   | \\_/ ||  | \_/ ||   / . \\  
     /____//     |_||    \____//    \___//   /_//\_\\ 
    `-----`      `-`'     `---`     `---`    `-`  --` 
                                                      
    
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