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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?