Question

You borrow $90,000 to buy 2019 Tesla Model S, the annual interest rate is 6% and you have 5 years to pay off your loan with monthly payments. After 2 years you want to refinance the loan, how much do you still owe on the car?

		$54,371.73
		$57,193.99
		$62,295.11
		$24,888.99

At a family gathering, your uncle hears that you are taking a finance course with many real life applications. He wants to consult you regarding a new house he likes very much. The house is selling for $250,000. Your uncle can put $50,000 down and qualifies for 4% APR for 30 year mortgage. He asks you how much his monthly payments will approximately be if he buys the house. What would be your answer?

		$1,400.23
		$954.83
		$1,050.87
		$899.21

Answer 1

Ques-1)

Calculating the outstanding loan balance amount after 2 years of loan:-

where, P = LoanAmount = $90,000

r = Periodic Interest rate = 6%/12 = 0.5%

n= no of periods = 5yrs*12 =60

m = no of period lapsed =2yrs*12= 24

Outstanding loan Balance = $ 57,193.99

So, you still owe after 2 years is $ 57193.99

Hence, Option B

Ques-2)

Selling price of House = $250,000

Down-payment = $50,000

Loan Amounnt = $250,000 -$50,000

= $200,000

Calculating the monthly loan payment amount:-

where, P = LoanAmount = $200,000

r = Periodic Interest rate = 4%/12 = 0.333%

n= no of periods = 30yrs*12 =360

So, Monthly payments is $ 954.83

Hence, Option B

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