Personal Finance Mid term Exam 2 Fall 2014

.mheducation.com/connect/hmStudentSectionHomePortal.do?sectionId=32937068″ title=”Personal Finance: Fall 2014″>Personal Finance: Fall 2014
Assignment:Midterm Test #2

1.
award:
10
out of
10.00 points

A few years ago, Simon Powell
purchased a home for $180,000. Today, the home is worth $310,000. His
remaining mortgage balance is $130,000. Assuming that Simon can borrow up to
75 percent of the market value, what is the maximum amount he can borrow

Amount

$

2.
award:
10
out of
10.00 points

Louise McIntyre’s monthly gross
income is $3,400. Her employer withholds $740 in federal, state, and local
income taxes and $290 in Social Security taxes per month. Louise contributes
$140 each month for her IRA. Her monthly credit payments for VISA and
MasterCard are $85 and $80, respectively. Her monthly payment on an
automobile loan is $355.

a.

What is Louise’s debt
payments-to-income ratio?(Round your answer to 1 decimal place.)

%

b.

Is Louise living within her means?

3.
award:
10
out of
10.00 points

Joshua borrowed $1,500 for one
year and paid $75 in interest. The bank charged him an $15 service charge.
What is the finance charge on this loan?

4.
award:
10
out of
10.00 points

Joshua borrowed $600 for one year
and paid $30 in interest. The bank charged him an $9 service charge. If
Joshua paid the $600 in 12 equal monthly payments, what is the APR?(Round your answer to 1 decimal place.)

APR

%

5.
award:
10
out of
10.00 points

John Walters is comparing the cost
of credit to the cash price of an item. If John makes a $130 down payment and
pays $35 a month for 24 months, how much more will that amount be than the
cash price of $713?

Amount

$

6.
award:
10
out of
10.00 points

A work-at-home opportunity is
available in which you will receive 2 percent of the sales for customers you
refer to the company. The cost of your “franchise fee” is $710. How much
would your customers have to buy to cover the cost of this fee?(Round your answer to the nearest dollar
amount.)

Amount

$

7.
award:
10
out of
10.00 points

If a person saves $66 a month by
using coupons and doing comparison shopping.

a.

What is the amount for a year?

Amount

$

b.

What would be the future value of
this annual amount over 10 years, assuming an interest rate of 4 percent? Use.mhhe.com/connect/0077506944/Chapter%201/exhibit_1-b.jpg”>Exhibit
1-B.(Round
time value factor to 3 decimal places and final answer to 2 decimal places.)

Future value

$

8.
award:
10
out of
10.00 points

A class-action suit against a
utility company resulted in a settlement of $1.7 million for 66,000
customers. If the legal fees, which must be paid from the settlement, are
$300,000, what amount will each plaintiff receive?(Round your answer to 2 decimal places.)

Amount

$

9.
award:
10
out of
10.00 points

Estimate the affordable monthly
mortgage payment, the affordable mortgage amount, and the affordable home
purchase price for the following situation. Use.mhhe.com/connect/0077506944/Chapter_7/exhibit_7_6.jpg”>Exhibit
7-6,.mhhe.com/connect/0077506944/Chapter_7/exhibit_7_7.jpg”>Exhibit
7-7.(Round
your intermediate and finalanswers to the nearestdollar amount.)

Monthly gross income

$

3,480

Other debt (monthly
payment)

$

240

20-year loan at

5

percent

Down payment to be
made (percent of purchase price)

10

percent

Monthly estimate for
property taxes and insurance

$

200

Affordable monthly
mortgage payment

$

Affordable mortgage
amount

$

Affordable home
purchase

$

10.
award:
10
out of
10.00 points

Kelly and Tim Jarowski plan to
refinance their mortgage to obtain a lower interest rate. They will reduce
their mortgage payments by $60 a month. Their closing costs for refinancing
will be $1,710. How long will it take them to cover the cost of refinancing?(Round your answer to the nearest whole number.)

Time period

11.
award:
10
out of
10.00 points

If an adjustable-rate 25-year
mortgage for $126,000 starts at 6.5 percent and increases to 7.0 percent,
what is the amount of increase of the monthly payment? Use.mhhe.com/connect/0077506944/Chapter_7/exhibit_7_7.jpg”>Exhibit
7-7.(Do not round intermediate calculations. Round
your answer to 2 decimal places.)

Amount of increase

$

12.
award:
10
out of
10.00 points

Kurt Simmons has 70/170/20 auto
insurance coverage. One evening he lost control of his vehicle, hitting a
parked car and damaging a storefront along the street. Damage to the parked
car was $7,900, and damage to the store was $23,820.

a.

What amount will the insurance
company pay for the damages?

Amount

$

b.

What amount will Kurt have to pay?

Amount

$

13.
award:
10
out of
10.00 points

Becky Fenton has 70/95/55
automobile insurance coverage. If two other people are awarded $90,000 each
for injuries in an auto accident in which Becky was judged at fault, how much
of this judgment would the insurance cover?

Maximum amount

$

14.
award:
10
out of
10.00 points

Dave and Ellen are newly married
and living in their first house. The yearly premium on their homeowner’s insurance
policy is $450 for the coverage they need. Their insurance company offers a 6
percent discount if they install dead-bolt locks on all exterior doors. The
couple can also receive a 4 percent discount if they install smoke detectors
on each floor. They have contacted a locksmith, who will provide and install
dead-bolt locks on the two exterior doors for $67 each. At the local hardware
store, smoke detectors cost $16 each, and the new house has two floors. Dave
and Ellen can install them themselves.

a.

What discount will Dave and Ellen
receive if they install the dead-bolt locks?

Discount

$

b.

What discount will Dave and Ellen
receive if they install smoke detectors?

Discount

$

15.
award:
10
out of
10.00 points

If Carissa Dalton has a $300,000
home insured for $202,000, based on the 70 percent coinsurance provision, how
much would the insurance company pay on a $12,000 claim?(Do not round intermediate calculations.Round your answer to 2 decimal places.)

Amount paid

$