Can you tell time?
Calculate t:
1 year, compounded monthly
1 x 12 = 12
Calculate r (show the fraction only):
7%, compounded monthly
r=.07/12
How much did you pay in interest if your payments on a $800 loan totaled $1300?
$1300 - $800 = $500
True or False?
In a home loan, every payment, the loan ending balance increases?
False. Making payments DECREASES the loan ending balance.
Calculate t:
10 years, compounded daily
10 x 365 = 3650
Calculate r (show the fraction only):
3.6%, compounded daily
r=.036/365
How much interest was made if the initial balance was $4000 and the ending balance was $12000?
$12000 - $4000 = $8000
True or False?
If everything else is the same, a bank that compounds interest more frequently will result in a greater ending balance.
True.
Calculate t:
5 years, compounded monthly
5 x 12 = 60
Calculate (1 + r):
8.4%, compounded monthly
(1 + r) = (1 + .084/12 ) = 1.007
After 20 years, your $40,000 has grown to $105,000. How much have you made in interest?
$105,000 - $40,000 = $65,000
True or False?
On a home mortgage, you pay the same amount of interest every month.
False. Every month you make the same payment, but the amount that goes toward interest and principle is different.
Calculate t:
35 years, compounded monthly
35 x 12 = 420
Calculate (1 + r):
7.3%, compounded daily
(1 + r) = (1 + .073/365 ) = 1.0002
You deferred your $27,000 student loan for 3 years and accrued $6,500 in interest. What is the balance of your loan now?
$27,000 + $6,500 = $33,500
True or False?
You do need to check your credit card statements for fraud.
True. Always read your statement and make sure all charges are yours.
Calculate t:
23 years, compounded daily
23 x 365 = 8,395
Calculate (1 + r):
.48%, compounded monthly
(1 + r) = (1 + .0048/12 ) = 1.0004
You have $50,000 to invest in a retirement fund. In 20 years, you want to have about $110,000. How much interest does your investment need to earn to reach your goal?
$110,000 - $50,000 = $60,000
True or False.
Savings is optional, and not really necessary. Planning is for fools.
False.