Week 7 Discussion

Week 7 Discussion - 9/09/2007 ACE 245 Discussion Section...

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ACE 245 Discussion Section – Week 7 Goals: 1) 2) Analyze rent vs. buy and low-interest vs. rebate decisions 1. Which of the following accounts is NOT considered a liquid asset: a. Negotiate Order of Withdrawal (NOW) account b. 26-week U.S. Treasury bill c. 24-month Certificate of Deposit d. Money Market account with minimum balance of $5000. e. Passbook Savings account 2. Assuming the applicant has no other installment loans outstanding, which of the following borrowing ratios is typically used by lenders of auto loans? a. Monthly auto loan payment < 20% of net monthly income b. Monthly auto loan payment < 20% of gross monthly income c. Monthly auto loan payment < 27% of net monthly income d. Monthly auto loan payment < 27% of gross monthly income e. Monthly auto loan payment < 33% of gross monthly income 3. Which of the following statement applies to automobile depreciation? a. Each year, the annual depreciation increases as the car wears out. b. It is an annual monetary cost reported on the expense statement. c. It is an annual adjustment to the value of assets reported on the net worth reconciliation. d. It is deductible from personal taxable income. e. Both answers a and c. 4. How large an auto loan could you afford if you could pay $400/mo for 36 months at an interest rate of 6% APR? a. $11,846 b. $12,584 c. $13,214 d. $13,902 e. $14,481 5. Which of the following items does NOT help explain differences in the prices of homes? a. Property tax rate b. Income levels c. Quality of public services d. Tax deduction for mortgage principal payments e. Air pollution 6. Which of the following statement best describes characteristics NOT shared by condominiums and housing cooperatives? a. Tax benefits for mortgage interest payments b. Costs for upkeep of yard are shared. 1
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Week 7 Discussion - 9/09/2007 ACE 245 Discussion Section...

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