BUSN 380 STUDY Career Path Begins/busn380study.com BUSN 380 STUDY Career Path Begins/busn380study.com | Page 36

1. Louise McIntyre’s monthly gross income is $2,000. Her employer
withholds $400 in federal, state, and local income taxes and $160 in
Social Security taxes per month. Louise contributes $80 per month for
her IRA. Her monthly credit payments for VISA, MasterCard, and
Discover card are $35, $30, and $20, respectively. Her monthly
payment on an automobile loan is $285. What is Louise’s debt
payments-to-income ratio? Is Louise living within her means?
2. Calculating Debt Payments–to-Income Ratio. Suppose that your
monthly net income is $2,400. Your monthly debt payments include
your student loan payment, a gas credit card and they total $360.
What is your debt payments – to – income ratio?
3. Dave borrowed $500 for one year and paid $50 in interest. The
bank charged him a $5 service charge.
A- What is the finance charge on this loan?
B- Dave borrowed $500 on January 1, 2006, and paid it all back at
once on December 31, 2006. What was the APR?
C- If Dave paid the $500 in 12 equal monthly payments, what is the
APR?
4. Calculating Simple Interest on a Loan. Damon convinced his aunt
to lend him $2,000 to purchase a plasma digital TV. She has agreed to
charge only 6 % simple interest, and he has agreed to repay the loan
at the end of one year. How much interest will he pay for the year?
5. After visiting several automobile dealerships, Richard Welch
selects the car he wants. He likes its $10,000 price, but financing
through the dealer is no bargain. He has $2,000 cash for a down
payment, so he needs an $8,000 loan. In shopping at several banks for