See attached

**NAME: **_______________________________

I have completed this assignment myself, working independently and not consulting anyone except the instructor.

**INSTRUCTIONS**

· The quiz is worth

1

00 points. There are 7 problems, some with multiple parts. This quiz is **
open book
** and

**. This means that you may refer to your textbook, notes, and online classroom materials, but**

open notes

open notes

**(and confirm this with your submission). You may take as much time as you wish, provided you turn in your quiz no later than**

you must work independently and may not consult anyone

you must work independently and may not consult anyone

**Sunday, January**

2

**7**.

· **
Show work/explanation where indicated. Answers without any work may earn little, if any, credit.
**You may type or write your work in your copy of the quiz, or if you prefer, create a document containing your work. Scanned work is acceptable also.

**In your document, be sure to include your name and the assertion of independence of work.**

· General quiz tips and instructions for submitting work are posted in the Quizzes conference.

· If you have any questions, please contact me by e-mail or phone (540-338-7120).

1. (7 pts) How much will you have to pay in interest for a credit card balance of $8,720 that is one month overdue, if a 27% annual interest rate is charged? That is, what is the interest charged for one month? **Show work.**

2. (7 pts) A payday loan is a small, short-term loan to a borrower, offered with the idea that it is paid back quickly within the next pay period or so. Pay-Later Loans will provide a loan of $375, to be paid back in 48 days with a fee of $60. (The fee is equivalent to an interest charge). What is the annual rate of interest for this loan? (Assume simple interest with a 360 day year.) **Show work/explanation**.

3. (7 pts) Paul arranges for $17,485 of home improvement work to be done on his house, financed with payments of $407 per month for 4 years. How much total interest will Paul pay? **Show work/explanation.**

4. (12 pts) Which investment is more advantageous? Show work/explanation.

Option 1: An investment with an annual interest rate of 9.5% and interest compounded monthly

or Option 2: An investment with an annual interest rate of 9.6% and interest compounded semi-annually

5. (10 pts) A couple has set up a sinking fund in order to have $50,000 in 5 years for the down payment on a house. How much should be paid quarterly into an account paying 5.6% annual interest compounded quarterly? Show work.

6. (25 pts)

Albert makes a one-time deposit of $9,000 in a savings account at 6.9% annual interest compounded monthly.

Betty deposits $150 into a savings account at the end of every month for 7 years at 6.9% annual interest compounded monthly.

(a) How much will Albert have in his account at the end of seven years? Show work.

(b) How much will Betty have in her account at the end of seven years? Show work.

(c) Who has more money in his/her account at the end of seven years, Albert or Betty? _______

(d) How much has each person earned in total interest, at the end of seven years? Who earned more in total interest? Show work.

7. (32 pts) To purchase a house, a homebuyer takes out a mortgage, borrowing $290,000 at the annual interest rate 4.2%, compounded monthly for 30 years. (The problem has four parts.)

(a) Calculate the **monthly payment**. Show how to carry out the calculation.

(b) Complete the following table. (Round amounts to the nearest cent.)

Payment number |
Interest Paid |
Principal Paid |
Unpaid balance |

1 | |||

2 |

Show the calculations necessary to arrive at the entries in the table.

(c) Calculate the **total interest paid** if the loan is held for the entire term. **Show some work.**

(d) Calculate the **unpaid balance after 6 years.**

What **percentage** of the amount borrowed is still unpaid?

Show work.