Home| Course Catalog| Career Planning

Free Online Course on Personal Finance

Site Search

Case Study #1 Answers

Matt’s interest cost is calculated as principal x interest rate x time.

A. The APR for the one-year loan is:

Interest = $1,000 * .12 * 1 year = $120

Fees are $20 + $20 + $60 = $100

His APR is (120 + 100) / 1,000 = 22.0%

B. The APR for the two-year loan is:

Interest = $1,000 * .12 * 2 years = $240

Fees are $20 + $20 + $60 = $100

His APR is

[(240 + 100) / 2] / 1,000 = 17.0%.

Since this is a single-payment loan, the average amount borrowed is the same over both years. Note that Matt’s APR is significantly higher than his stated interest rate. He should be very careful if taking out this loan.

 



Our Network Of Sites:
Apply 4 Admissions.com              | A2ZColleges.com  | OpenLearningWorld.com  | Totaram.com
Anatomy Colleges.com                | Anesthesiology Schools.com  | Architecture Colleges.com | Audiology Schools.com
Cardiology Colleges.com            | Computer Science Colleges.com| Computer Science Schools.com| Dermatology Schools.com
Epidemiology Schools.com         | Gastroenterology Schools.com  | Hematology Schools.com     | Immunology Schools.com
IT Colleges.com                | Kinesiology Schools.com  | Language Colleges.com  | Music Colleges.com
Nephrology Schools.com             | Neurology Schools.com  | Neurosurgery Schools.com | Obstetrics Schools.com
Oncology Schools.com    | Ophthalmology Schools.com | Orthopedics Schools.com       | Osteopathy Schools.com
Otolaryngology Schools.com| Pathology Schools.com  | Pediatrics Schools.com  | Physical Therapy Colleges.com
Plastic Surgery Schools.com| Podiatry Schools.com  | Psychiatry Schools.com   | Pulmonary Schools.com 
Radiology Schools.com| Sports Medicine Schools.com| Surgery Schools.com | Toxicology Schools.com
US Law Colleges.com| US Med Schools.com | US Dental Schools.com

About Us Terms of Use | Contact Us | Partner with Us | Press Release | Sitemap | Disclaimer | Privacy Policy


©1999-2011 OpenLearningWorld . com - All Rights Reserved