Q.2) Choose the correct answer for each of the following question Marie can affo

Question

Q.2) Choose the correct answer for each of the following question

Marie can afford a $250 per month car payment. She has found a 5 year loan at 7% interest. How expensive of a car can she afford? A) About $18.000 B) About $21,000 C) About $12, 600 D) About $15, 200 ii) Marie can afford a $250 per month car payment. She has found a 5 year loan at 7% interest. How much total "interest" will she pay the loan company? A) About $2, 300 B) About $6, 200 C)About $3, 100 D)About $10,000 iii) Suppose you want to buy a $200,000 house. You plan to pay 10% as a down payment, and take out a 30 year loan for the rest. How much is the loan amount going to be? A) $180,000 B) $220,000 C) $200,000 D) $170,000 iv) Suppose you want to buy a $200,000 house. You plan to pay 10% as a down payment, and take out a 30 year loan for the rest. What will your monthly payment be if the interest rate is 5%? A) About $830 per month B)About $1.210 per month C) About $1, 340 per month D) About $960 per month v) Suppose you want to buy a $200,000 house. You plan to pay 10% as a down payment, and take out a 30 year loan for the rest. What will your monthly payment be if the interest rate is 6%? A) About $1, 080 per month B) About $970 per month C) About 1, 932 per month. D)About $1, 315 per month

Explanation / Answer

Marie affords to pay $250 p.m. So for an year it is 250×12=3000 and therefore for a period of 5 yrs it willl be 3000×5= 15000. Now this is amount A. Then

A=P(1+ nr/100)

15000= P ( 1+ 5×7/100)

P= 15000/1.35

=11111

So the Principal amount can be $ 11,111.

So based on tbis the loan can be around this range.

So option C can be taken as right answer.

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