Interest and Loan Quiz

If interest (r) of 7.5% p.a. is to be debited fortnightly on a loan requiring fortnightly repayments, then the growth rate (R) would be closest to:

• 0.002

• 0.003

• 1.003

• 1.002

• 1.0075

If $2570 was borrowed at 7.3% p.a. by Joanne Rich, with instalments due monthly and interest adjusted monthly, then the required instalments needed to fully pay out the loan in 4 years would be:

• $61.90

• $54.21

• $54.20

• $763.88

• $186.67

Elena needed to borrow $450 to purchase a couch. The yearly interest rate was a flat 3.75%. The loan was to be paid back in 12 equal monthly instalments. Her monthly repayments were:

• $140.63

• $37.50

• $139.27

• $38.91

• $40.32

A charity fund wants to set up a $2000 annual scholarship. They are able to get a financial institution to offer a long-term interest rate of 5% p.a. The amount that needs to be raised by the charity is:

• $4000

• $40,000

• $50,000

• $80,000

• $20,000

A loan of $5000 at a rate of 4.5% p.a. adjusted fortnightly is to be repaid in fortnightly instalments of $42.98 over a period of 5 years. The amount still owing after 3 years is:

• $2809.35

• $950.32

• $0.54

• $2136.07

• $1033.24

A reducing balance loan of $120,000 is repaid by quarterly instalments of $2215.42 over 25 years at an interest rate of 5.5% (adjusted quarterly). If instead, repayments of $2480 per quarter were made throughout the loan, the term of the loan in years would be closest to:

• A. 16

• B. 17

• C. 18

• D. 19

• E. 20

Alan has $15,000 to invest in an annuities investment. He contributes a further $600 every 6 months and earns an interest rate of 5% p.a. with interest being credited half yearly. Alan plans to withdraw the total amount in 10 years’ time. The final pay-out is:

• A. $28,787.83

• B. $39,906.04

• C. $21,750.61

• D. $34,232.45

• E. $29,600.13

Increasing the frequency of repayments of a loan without changing the overall outlay of money paid, will:

• reduce the amount originally owed.

• lower the interest rate.

• reduce the amount originally owed and lower the interest rate.

• reduce the term of the loan and reduce the amount of interest paid.

• reduce the term of the loan only.

Susie is 42 years of age and is planning to retire at 60 years of age. She is on an annual salary of $87 000 and her employer contributes 9% of her gross monthly income to her superfund each month. Her superfund has been returning an interest rate of 5% p.a. compounded monthly and the current balance of her superfund is $42 000. Susie wants to have $1 000 000 in her superfund when she retires. The extra amount that she will need to contribute per month to realise the million dollar payout is closest to:

• $1000

• $1910

• $214

• $3615

• $2568

Jane borrows $24,000 to purchase some much-needed equipment. She agrees to pay back the loan over a period of 5 years at 6.8% p.a. compounded monthly. She wants to know how much the fifth payment will reduce the remaining balance of the loan by. If Vn = the amount left after n payments, to do this she needs to calculate:

• V6

• V6 - V5

• V5 - V4

• V5

• V4 - V5