martensLA11 - than 5 years) method for calculating interest...

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1. What does it mean to consolidate a loan? Consolidate a loan means to combine two loans into one loan. 2. Give one example to find the APR for a loan paid off in monthly payments. A 2 year loan for $5000 with a finance charge of 537.28 with no down payment is calculated like this: (537.28*100)/5000 = 10.75 looking up this number ont eh chart we find it is closest to 10% APR = 10% 3. What is the United States Rule and the Rule of 78 when prepaying a loan? The United States rule states that with a partial payment the interest is calculated from the first day paid first and the rest of the payment goes to the principle. The Rule of 78 is an inaccurate (and hence federally outlawed for loans for more
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Unformatted text preview: than 5 years) method for calculating interest on payments that give the loaner an advantage in that if the borrower pays back early he has to pay back more. 4. How do you use the Amortization Table to amortize a loan? Find the number of periods and the rate, then find these numbers in their respective row and column and find the rate where they meet. To find the payment multiply the loan amount by the number you just found. $5000 loan at 10% for 2 years: Payment = 5000*.1113 = 556.5 5. Application Problem: Give one example where you may use a concept found in this chapter. When looking for the rate on a CD you might compare APR to find the best CD for your money....
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This note was uploaded on 12/30/2009 for the course MATH 1220 taught by Professor Roarty during the Spring '09 term at Metropolitan Community College- Omaha.

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