Question Bank

18.2.2015

Q.1 Sylvia and Ted borrow $350 000 to purchase a home. The loan repayment schedule is shown
below for the first month. The monthly repayment is 3000$
n
1 MONTH
ST

PRINCIPAL(P)
$ 350000

INTEREST (I)
$2333.33

P+I
$352 333.333

P+I-R
$349 333.33

What is the annual flat rate of interest charged on Sylvia and Teds Loan ?
a) 0.67%
b) 0.08%
c) 6.7%
d) 8%
Q.2 Trudy owns a credit card with a daily interest rate of 0.05%. During June , she purchased items
on her credit card. At the end of June , she forgot to pay the bill. She was charged a late fee of $40 and
was charged interest only for the 12 days she was late in paying the bill. She had to pay a total of
$ 1080 which includes the original purchases , interest and the late payment fees. Find the cost of her
purchases during the month of June.
a) 1790
b) 2051.66
c) 1033.80
d) 1080
Hint: Total Amount to be paid = Original Amount (P) + Interest (I) + Late fees
Interest I = P x r x n
Q.3 The Table below shows the monthly repayments on a loan of $1000 at various interest rates
over various periods.
Monthly repayment Table ( per $1000 borrowed)
Interest rate (%) p.a
6.5%
7.5%
8.5%
i)

10
11.35
11.87
12.40

15
8.71
9.27
9.85

Time of Loan (years)

20
7.46
8.06
8.68

25
6.75
7.39
8.05

Giselle wishes to buy a house for $ 475 000. The bank offers her a loan over 15 years at
8.5%. Calculate her monthly repayments.
a) $4578.75
b) $4678.75
c) $4778.75
d) $4878.75

ii)

Mauro borrowed money from the same bank at 8.5% p.a over 5 years.If his monthly
repayments were $ 6182.40 , how much money did he borrow.

a)
b)
c)
d)

$ 768 000
$ 780 000
$ 747 000
$ 729 800

Q.4 Amount borrowed is $ 80 000 . Annual interest rate is 8% and the monthly repayment is $ 1000
n
1
2
3
4

Principal (P)
$80 000
$79 533.33
$79 063.55
$78 590.64

Interest (I)
$533.33
$530.22
$527.09
X

P+I
$80 533.33
$80 063.55
$79 590.54
$ 79 114.58

P+I-R
Y
$ 79 063.55
$ 78 590.64
$78 114.58

The values of X and Y in the table ?

a)
b)
c)
d)

X = 523.94 and Y = 79533.33

X = 543.94 and Y = 78533.33
X = 513.94 and Y = 79533.33
X = 593.94 and Y = 78533.33

Q.5 The effective simple interest E , per period charged on a loan in related to stated interest rate r
(1+) 1
is found using E =
. Find the equivalent effective simple interest rate [E] if the stated

rate of interest r is 9% p.a and the n = 5 years.

a) 0.9%
b) 2.9%
c) 10.8%
d) 11.3%
Q.6 Lucinda needs to buy a new refrigerator and decides to buy on terms.The advertisements says
$1200 cash OR 20% deposit plus $40 per month for 3 years.
i) Calculate the value of deposit
a) $400
b) $240
c) $200
d) $150
ii) How much does Lucinda pay for the refrigerator in total?
a) $ 1640
b) $ 1660
c) $ 1680
d) $ 1700
iii) Calculate the annual flat rate of interest that Lucinda paid.
a) 25%
b) 13.33%
c) 18.55%
d) 6.66%

Q.7 Emma has a new credit card that has no interest free period and charges 15.6% p.a flat rate
interest on all purchases. Interest is charged on amounts from ( and including) the date of purchase
upto ( and including) the payment date.
On 16th June Emma uses her credit card for the first time to buy a pair of boots for $230. If she makes
no further purchases, what amount would Emma need to repay if she wants to pay the outstanding
balance on the 2nd July.
a)
b)
c)
d)

$231.57
$231.67
$235.51
$232.67

Hint :- Convert the p.a rate of interest to per day

0.156
365

= 0.000427 per day

Outstanding Balance = Original Amount (Principal) + Interest (I)

I = Pxrxn , here n = 17 days
Q.8 The table shows the monthly repayments on a loan of $1000 at various interest rates over various
periods.
Monthly repayment Table ( per $1000 borrowed)
Years
10
15
20

5%
$10.61
$7.91
$6.60

Interest rate (%) p.a

6%
7%
$13.14
$13.63
$8.44
$8.99
$7.16
$7.75

8%
$14.14
$9.56
$8.36

Patrick is going to purchase a home unit valued at $250 000. The interest rate on their loan is 7% p.a
. They will repay the loan over 20 years with equal monthly instalments.
i) Calculate their monthly instalments
a) $ 1560
b) $ 1937.5
c) $ 1856.8
d) $ 1763.5
ii) Calculate the total they will pay over the length of the loan.
a) $ 450 000
b) $ 460 000
c) $ 455 000
d) $ 465 000
iii) Calculate the interest amount they will pay over the length of the loan
a) $ 215 000
b) $ 225 000
c) $ 235 000
d) $ 200 000
Hint :- Total amount to be paid after 2 years = Original amount + Interest Amount

iv) Would it be better for Patrick to repay the loan over 15 years at the same rate of interest ? Justify
a) Yes it would be better as the interest amount for 15 years would be lesser and hence the total
amount which he pays would be lesser as compared to 20 years. { TRY PROVING YOURSELF }
Q.9 Clarie paid $118.95 for the coat on her credit card which has no interest free period. The interest
rate on her credit card is 18.75%. She pays the amount owing 17 days later. Calculate the total
amount she will have to pay .
a) $118.98
b) $119.98
c) $ 120.98
d) $ 121.98
Q.10 Declan borrows $ 540 to buy a washing machine . The simple interest rate of the loan is 12%
p.a . The amount is to be repaid in 24 equal monthly instalments. What is Declans monthly
repayment? [Instalment and repayment mean the same]
a) $28.5
b) $27.9
c) $26.5
d) $26.9

Q.11 Renata has a credit card with an interest rate of 20.44% . There is no interest free period.
Show that her daily interest rate is 0.056% .
She purchases a new laptop for $ 2699 using her credit card. She pays the card off in full after 23
days. What amount did she need to pay ?
a) $ 2780.36
b) $ 2769.85
c) $ 2896.63
d)$ 2733.76
Q.12 Lauren is buying a new car. The cash prics is $ 15 990. She decides to buy the car on terms of
30% deposit and 18 monthly repayments of $ 680. How much more does she pay when buying on
terms.
a) $ 1047
b) $ 3750
c) $ 8547
d) $ 17 037
Q.13 Wade has secured a flat rate car loan of $12 000 for the full price of his new car with Southern
Stone Building Society at an interest rate of 9.25% p.a over 4 years.
i) The monthly repayment is
a) $ 350.50
b) $ 342.50
c) $ 345.50
d) $ 348.50
ii) Wades monthly repayment represents 35% of his net monthly income. Calculate his net monthly
income

a) $800
b) $ 958.57
c) $ 978.57
d) $ 980.20
Q.14 The following table shows monthly repayments for loans of various amounts over 30 years at
different rates of interest.
Monthly repayments on a 30 year loan
Interest rate (%) p.a
6.75%
7.25%
8.5%

$ 150 000
$972.90
$997.95
$1023.23

$ 200 000
$1272.90
$1289.95
$1323.23

Loan Amount
$ 250 000
$1658.35
$1705.44
$1830.45

$ 300 000
$1972.90
$1997.95
$2023.23

Hamish borrows $ 250 000 over a period of 30 years at 7.25%p.a . How much interest would Hamish
pay over 30 years.
a) $1705.44
b) $363 958.40
c) $ 51 163.20
d) $ 613 958.40
Q.15 Betty and Garry want to purchase a new entertainment system. The price of the unit is $ 8999.
They decide on the following finance option.
Deposit of $ 999
Interest on balance charged at a flat rate 12.5% p.a for 3 years.
They will repay the loan in equal monthly instalments over the 3 years
i) Calculate the amount of interest charged on the loan
a) $ 4000
b) $ 3000
c) $ 3500
d) $ 3800
ii) Calculate the monthly repayments they will need to make
a) $ 305.55
b) $ 306.55
c) $ 307.55
d) $ 304.55
Hint: - Monthly repayment =

[ Outstanding amount ( )+Interest ]

Number of months

iii) Calculate the total amount paid for the unit

a) $ 11999
b) $ 11000
c) $ 9000
d) $ 9999

Q.16 Brandon has a credit card with a simple interest rate of 0.04% per day and no interest free period.
He makes a purchase of $280. After 23 days , the total amount payable including interest is
a) $ 2.58
b) $ 257.60
c) $ 280.01
d) $ 282.58
Q.17 Kurt is intending to take out a reducible balance loan for $45 000. He can afford to repay the
loan with monthly repayments of $ 512 . Interest will be charged at a rate of 14.4% p.a
n
1
2

Principal (P)
45 000
W

Interest (I)
X

P+I
Y

P+I-R
Z

Match the values of X, Y , Z and W

X
Y
Z
W

$45 540
$45 028
$ 540
$45 028

Hence find the Interest for the second month and the total balance he owes after second repayment
is made.
Q.18 Jenny takes out a flat rate loan of $ 6500 and repays the loan with monthly repayments over 3
years. Interest is charged at 9% p.a. The total amount that Jenny needs to repay is:
a) $229.31
b) $1755
c) $ 6500
d) $ 8255
Q.19 The following portion of a home loan table shows how the balance of a home loan progresses.
The loan of $ 230 000 is to be repaid over 18 years. Interest is calculated monthly at 9.6% p.a and
monthly repayment of $ 2240.80 is made.
Month
1
2
3
4
5
i)
ii)

Amount owing at
beginning of the
month (P)
230 000
229 599.20
229 195.19
228 787.96
228 377.46

Interest charged
at end of
month(I)
1840
1836.79
1833.56
1830.30
1827.02

Amount owing
before
repayment (P+I)
231 840
231 435.99
231 028.76
230 618.26
230 2014.48

Amount owing at
end of month
(P+I-R)
229 599.20
229 195.19
228 787.96
228 377.46
227 963.68

How much is owing on the home loan at the end of first 5 months
How much has been paid of the home loan at the end of first five months

Hint: Amount paid off till a given month = Original Loan Amount - Amount owing at end of month
iii) Calculate the interest charged at the end of 6th month.

Q.20 The River bank offers a Vista credit card with no interest free period. Interest is charged at a
flat rate of 18.8% p.a . Calculate the interest charged on a balance of $847 if the card is paid off
after 64 days.
a) $ 13.69
b) $ 27.92
c) $ 45.65
d) $ 30.35
Hint : Interest charged = (Amount to be paid) x ( Number of days) x ( Rate of interest per day)
Q.21 Two car companies are selling the same model car but on different terms as indicated
below
Cash Price

Company A

$ 22 000

Company B

$ 23 000

Terms
15% deposit plus 36
equal monthly
instalments of $ 770
$2300 deposit plus
36 equal monthly
instalments of $ 786

i)Calculate the deposit required by Company A

a) $ 3000
b) $ 3100
c) $ 3300
d) $ 3500
ii) Calculate the interest charged by Company A
a) $ 9020
b) $ 9000
c) $ 8500
d) $ 9500
iii) Calculate the flat rate of interest (p.a) charged by Company A. Give your answer to 1 decimal
place
a) 15.50%
b) 16.07%
c) 17.95%
d) 15.60%