BUSN 380 STUDY Career Path Begins/busn380study.com BUSN 380 STUDY Career Path Begins/busn380study.com | Page 37

an installment loan, he learns that interest on most automobile loans is
quoted at add-on rates.
That is, during the life of the loan, interest is paid on the full amount
borrowed even though a portion of the principal has been paid back.
Richard borrows $8,000 for a period of four years at an add-on
interest rate of 11 percent.
Questions
a. What is the total interest on Richard’s loan?
b. What is the total cost of the car?
c. What is the monthly payment?
d. What is the annual percentage rate (APR)?
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BUSN 380 Week 3 Quiz Set 1

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Question 1. Question : (TCO 3) Examples of _____ include
automobile and installment loans for purchasing furniture or
appliances.
a line of credit
a credit card loan
open-end credit
closed-end credit