Financial Mathematics - Loans

When an individual borrows money, this is called ...

• An investment

• A term deposit

• A loan

• A share

To find the payment for a reducing balance loan, the future value (Fv) would be entered into the graphics calculator as ...

• The same as the Present Value

• The stated interest rate as a decimal

• A zero

• $100

For a $10,000 loan being repaid over 3 years at 9.6% p.a. interest compounded monthly, the monthly repayments would be (calculate and select closest answer from below)

• $300

• $320

• $350

• $400

For the $10,000 loan being repaid over 3 years at 9.6% p.a. interest compounded monthly, calculate the total amount that would be repaid by the borrower over the term of the loan (to the nearest dollar).

• $10,000

• $10,549

• $11,000

• $11,549

And again, for this $10,000 loan being repaid over 3 years at 9.6% p.a. interest compounded monthly, what was the total amount of interest paid on this loan? (to the nearest dollar)

• $1350

• $1450

• $1550

• $1650

For a home loan of $310,000 at interest rate 5.2% p.a. compounding fortnightly for 20 years, find the fortnightly repayments:

• $959

• $959.49

• $959.69

• $959.89

For this home loan of $310,000 at interest rate 5.2% p.a. compounding fortnightly for 20 years, find the outstanding balance of the loan after 16 years (to the nearest thousand)

• $90,000

• $91,000

• $92,000

• $93,000

For this same home loan of $310,000 at interest rate 5.2% p.a. compounding fortnightly for 20 years, after 16 years, the borrower changes their payment to $1500 per fortnight. How many years (to the nearest half or full year) will it take to pay off the loan from here?

• 2

• 2.5

• 3

• 3.5

Commencing from page 214, six strategies are outlined as ways to minimise the interest owed on a loan. Three of them are listed below, check the correct ones:

• Borrowing from your parents

• Making larger repayments per period

• Cancelling your credit card

• Making more frequent repayments

• Reducing the term of the loan

The next questions refer to this home loan: $195,000 home loan, calculated over 30 years at 7.2% p.a. with interest compounding quarterly. What is the quarterly repayment (rounded correctly)

• $3977.60

• $3977.61

• $3977.62

• $3977.63