Answers2027 Ignite Financial Literacy-Personal Finance - EL3403The Cost of Credit

The Cost of Credit Answers

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1
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Which would be considered closed-end credit situations? Check all that apply.

A
Jason bought a used car and got a loan from his credit union.
B
The Overtons bought a new home and mortgaged it for 30 years.
C
Samantha got her first credit card at age 18 with a credit limit of $300.
D
Tammy borrowed $40,000 in school loans to be paid back in 5 years.
E
Tim always pays his credit card balance in full each month.
2
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How much will Ava pay in interest if she pays back the card in 11 months?$10$16$13.06$32

A
$10
B
$16
C
$13.06
D
$32
3

Jason has a credit card that charges 2% interest on unpaid balances each month. He spent $300, but only makes the minimum payment of $30 a month when the bill is due. What is the balance on his credit card account after making his payment at the end of the fourth month?

A
$201.08
B
$196.55
C
$226.55
D
$231.08
4

How much will Ava save immediately if she uses the credit card and pays the balance during the billing cycle?$5$10$15$20

A
$5
B
$10
C
$15
D
$20
5

The Lagan family bought a $150,000 home in 2002. They obtained a mortgage loan for 30 years. The monthly payments, not including property taxes and insurance, are $895.00. Assuming these monthly payments do not change, how much interest will be paid on the house during the 30 years?(Monthly Payment)(12 months per year)(30 years)(895)(12)(30) = $322,200 total amount paid (principal and interest)

A
$322,200 of interest
B
$150,000 of interest
C
$172,200 of interest
D
$472,200 of interest
6

The table shows Mr. Winkler’s schedule for paying off his credit card balance. A 5-column table with 4 rows. Column 1 is labeled Balance with entries 650 dollars, 556 dollars and 60 cents, 462 dollars and 8 cents, 366 dollars and 42 cents. Column 2 is labeled payment with entries 100 dollars, 100 dollars, 100 dollars, 100 dollars. Column 3 is labeled new balance with entries 550 dollars, 456 dollars and 60 cents, 362 dollars and 8 cents, 266 dollars and 42 cents. Column 4 is labeled rate with entries 0.012, 0.012, 0.012, 0.012. Column 5 is labeled interest with entries 6 dollars and 60 cents, 5 dollars and 48 cents, 4. dollars and 34 cents, 3 dollars and 20 cents. If he continues to make monthly payments of $100, and makes no new purchases, how many more payments will he have to make before the balance is zero?

Answer:

3

7

Candice wants to buy a $2500 scooter with a loan from her local bank. Which loan option would be best for Candice if she wants the lowest interest rate and wants to pay off the scooter within 5 years.

A
Loan option 1 will take less than 4 years to pay off and have an annual interest rate of 15%, and total interest of about $700.
B
Loan option 2 will take 3 years to pay off, at which point she will have paid $1,050 in interest.
C
Loan option 3 will take 7 years to pay off, and the total paid for the scooter will be $3200.
D
Loan option 4 will take 5 years to pay off, and the total paid for the scooter will be $3500.
8

What is the total amount of interest Shelby will pay for the car loan?$1157.28$2478.58$7000$9478.58

A
$1157.28
B
$2478.58
C
$7000
D
$9478.58
9

Sample Response: Closed-end credit is a form of credit that must be paid off by a specific date. Open-end credit is an amount of credit that can be borrowed repeatedly as long as consistent payments are made according to the bank’s terms. The cost of these types of credit are fees and interest rates charged by the lender. Check each statement included in your response.Closed-end credit is a form of credit that must be paid off by a specific date. Open-end credit can be borrowed against over and

A
Closed-end credit is a form of credit that must be paid off by a specific date.
B
Open-end credit can be borrowed against over and over.
C
Both forms of credit charge interest.
D
Both forms may charge fees, particularly when minimum payments are not made.
10

Check each statement included in your response.

A
Mark is correct.
B
Credit cards charge interest on unpaid balances.
C
Paying cash has no interest.
11

How many more years will it take Shelby to pay off her loan? 1234

A
1
B
2
C
3
D
4

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