Math (Interest Only)

Question 1

Ally has recently received an interest only loan for $75,000 to operate a food cart in downtown Vancouver. The loan has an interest rate of 6% per annum, compounded monthly, and requires interest only payments every month. How much are the monthly interest only payments that Ally makes if the duration of the loan is two years?

(1) $750
(2) $500
(3) $375
(4) $1,000

Answer 1

3

j12=6%
n=24

75000 ? -75,000

Question 2

Brad has recently received an interest only loan for $100,000 to operate a food cart in downtown Vancouver. The loan has an interest rate of 8% per annum, compounded monthly, and requires interest only payments every month. How much are the monthly interest only payments that Brad makes if the duration of the loan is two years?

(1) $1,333.33
(2) $666.67
(3) $500.33
(4) $1,200.67

Answer 2

2

j12=8%
n = 2 (24)

100,000 ? -100,000

=666.67

Question 3

An interest only loan has an original loan amount of $15,000, carries an interest rate of 6.5% per annum, compounded semi-annually, and has monthly payments of $80.17. When will this loan be completely repaid?

(1) 670 months
(2) 696.44934 months
(3) 300 months
(4) impossible to determine from the information provided

Answer 3

4

j2 = 6.5%
n=?

15,000 -80.17 -15,000

=no solution

Question 4

Carolyn has recently received an interest only loan for $80,000 to operate a food cart in downtown Vancouver. The loan has an interest rate of 9% per annum, compounded quarterly, and requires interest only payments every quarter. Calculate the quarterly interest only payments that Carolyn makes if the duration of the loan is 18 months?

(1) $1,200
(2) $3,600
(3) $1,800
(4) $7,200

Answer 4

3

j4 = 9%
n = 4.5 (18/4)

80,000 ? -80,000

=-1,800.00

Question 5

A local builder negotiates an interest only loan with ABC Finance Company. The face value of the loan is
$450,000, the interest rate is j2 = 8%, the term of the loan is 3 years, and the interest only payments are to be made monthly. What will be the size of the monthly interest only payments?

(1) $2,951.19
(2) $3,434.47
(3) $3,727.61
(4) $2,520.33

Answer 5

1

j2=8%
n=36

450,000 ? -450,000

=$-2,951.18