Amortization

Amortization

Please ask questions when needed.

Multiple Choice

Amortization is the paying off of debt with a ____________________ repayment schedule in regular installments over a period of time for example with a mortgage or a car loan.

• fixed

• variable

• differentiated

• fluctuating

Multiple Choice

A portion of each payment is for interest while the remaining amount is applied towards the __________________________ balance.

• principal

• interest

• interest rate

• loan term

Multiple Choice

A portion of each payment is for interest while the remaining amount is applied towards the __________________________ balance.

• principal

• interest

• interest rate

• loan term

Multiple Choice

Amortization is the paying off of debt with a ____________________ repayment schedule in regular installments over a period of time for example with a mortgage or a car loan.

• fixed

• variable

• differentiated

• fluctuating

Multiple Choice

Initially, a large portion of each payment is devoted to __________________________.

• interest

• the principal balance

• loan term

• interest rate

Multiple Choice

Amortization is made up of what two parts?

• Interest and payment

• Principal and payment

• Interest and principal

• none of the above

Multiple Choice

As the loan matures, larger portions go towards paying down the ___________________________.

• principal balance

• interest

• interest rate

• loan term

Multiple Choice

If a friend of yours had never heard of amortization before and asked you to explain how loan payments work, what would you say?

• Amortization is a scheduled breakdown of how much you'll pay every month (fixed) to repay a loan. It shows what portion of your payment is going to interest an principal each month.

• Every month, you pay the interest due first, and then all remaining portions of your payment goes toward paying down the principal balance

• Both statements are true.

Multiple Choice

If you have an amortized loan, your monthly payment will be______________________________.

• always the same

• always different

• sometimes the same

• never the same

Multiple Choice

If you have an amortized loan, your monthly payment will _______________

• never be the same

• sometimes be the same

• always be the same

Multiple Choice

The installment payment on the loan is termed____________.

• Down payment

• Mortgages

• Amortization

• Buyer's equity

Multiple Choice

As a loan matures, larger portions go towards paying down the

• principal balance

• interest

• loan term

• none of the above

How to calculate down payment?

Calculating Down Payment Steps:

Multiple Choice

Determine the down payment amount.

Cost of house: $179,900

Down Payment: 25% of the cost of the house

• $36,600

• $44,975

• $42,653

• $46,325

Multiple Choice

Determine the down payment amount.

Cost of house: $195,000

Down Payment: 20% of the cost of the house

• $17000

• $7,435

• $743.50

• $39,000

Multiple Choice

Determine the down payment amount.

Cost of house: $195,000

Down Payment: 20% of the cost of the house

• $17000

• $7,435

• $743.50

• $39,000

Multiple Choice

Determine the down payment amount.

Cost of house: $315,500

Down Payment: 30% of the cost of the house

• $130,450

• $92,362.50

• $85,362

• $94,650

you may use any calculator that you like.

the one we normally use is a google search for "exponential calculator"

Multiple Choice

Determine the monthly payment for the loan amount. Use the fixed-rate mortage monthly payment formula.

Cost of house: $112,000

Interest Rate: 4.5%

Term: 15 years

• $620.85

• $925.53

• $856.79

• $785.30

Multiple Choice

Something a bank or financial institution makes and charges you interest?

• time
• Loan
• rate
• sales tax

Multiple Choice

Determine the monthly payment for the loan amount. Use the fixed-rate mortgage monthly payment formula.

Cost of house: $248,500

Interest Rate: 4%

Term: 20 years

• $2,680.81

• $1,505.86

• $2,720.15

• $1,998.89

Multiple Choice

Brenda's bank offers car financing for 3, 4, or 5 years.  If Brenda chooses 5-year financing, how many monthly payments will she have?

• 60
• 48
• 36
• 12

Multiple Choice

Determine the monthly payment for the loan amount. Use the fixed-rate mortgage monthly payment formula.

Cost of house: $248,500

Interest Rate: 4%

Term: 20 years

• $2,680.81

• $1,505.86

• $2,720.15

• $1,998.89

Multiple Choice

Determine the monthly payment for the loan amount compounded monthly. Use the Amortization formula.

Cost of house: $175,500

Interest Rate: 5%

Term: 30 years

• $942.12

• $800.50

• $1,008.96

• $786.98

Multiple Choice

Determine the monthly payment for the loan amount compounded monthly. Use the Amortization formula.

Cost of house: $113,650

Interest Rate: 5.85%

Term: 20 years

• $1,005.00

• $926.15

• $804.42

• $798.30

Multiple Choice

Determine the monthly payment for the loan amount compounded monthly. Use the Amortization formula.

Cost of house: $248,500

Interest Rate: 4%

Term: 20 years

• $2,680.81

• $1,505.86

• $2,720.15

• $1,998.89

Multiple Choice

Determine the monthly payment for the loan amount compounded monthly. Use the Amortization formula.

Cost of house: $169,900

Interest Rate: 5.5%

Term: 20 years

• $1,585.25

• $1,525.67

• $1,313.12

• $1,168.72

Multiple Choice

Determine the monthly payment for the loan amount compounded monthly. Use the Amortization formula.

Cost of house: $112,000

Interest Rate: 4.5%

Term: 15 years

• $620.85

• $925.53

• $856.79

• $785.30