Professional Documents
Culture Documents
02 Business Math Loans Worksheet 2 Payment and Total Cost PDF
02 Business Math Loans Worksheet 2 Payment and Total Cost PDF
Directions: Using the Loan Table handout, answer questions a) – f) for each problem shown below.
1.) For a small business start‐up, a person borrows $120,000 at 3% interest for 30 years.
Principle = $__________
Table Value = $__________
Number of Payments = ___________
Monthly Payment = $__________
Total Amount Repaid = $__________
Interest (cost) = $__________
2.) Same as 1.) except change the term from 30 years to 20 years.
a.) Principle = $__________
Table Value = $__________
Number of Payments = ___________
Monthly Payment = $__________
Total Amount Repaid = $__________
Interest (cost) = $__________
b.) How much in interest was saved by going with the 20 year term loan compared against the
original 30 year loan?
Answer: $__________ of interest is saved.
3.) A vehicle loan of $29,500 is made at a local bank with an interest rate of 6% and a term of 6 years.
Principle = $__________
Table Value = $__________
Number of Payments = ___________
Monthly Payment = $__________
Total Amount Repaid = $__________
Interest (cost) = $__________
4.) Suppose that just before you buy the vehicle in problem 3.), you are told that you can obtain
financing through the vehicle manufacturer’s finance subsidiary for 2.5% interest and a term of 6 years.
a.) Principle = $__________
Table Value = $__________
Number of Payments = ___________
Monthly Payment = $__________
Total Amount Repaid = $__________
Interest (cost) = $__________
b.) How much in interest was saved by going with the 2.5% loan compared against the original
6% interest loan?
Answer: $__________ of interest is saved.
Business Math – Loans (Worksheet #2) “Compute Loan Payments and Determine Cost to Borrow”
5.) Which purchasing option gives you the lowest Total Purchase Cost (the total amount of money spent
to buy the vehicle)?
Option A – Purchase a truck for $37,900 and get company financing of 0.5% interest for 5 years.
Option B – Purchase a truck for $37,900 and get a factory rebate of $3,500 and financing of 4% for 5
years.
Option A Option B
Principle = $__________ Principle = $__________
Table Value = $__________ Table Value = $__________
Number of Payments = ___________ Number of Payments = ___________
Monthly Payment = $__________ Monthly Payment = $__________
Total Amount Repaid = $__________ Total Amount Repaid = $__________
Interest (cost) = $__________ Interest (cost) = $__________
Option A Total Purchase Cost = $______________
Option B Total Purchase Cost = $______________
Option A/B results in the lowest Total Purchase Cost. It is lower by $__________
6.) A home was purchased by taking out a loan of $147,000 at 5.5% interest for 30 years. An escrow
account will be set up. Annual insurance and property taxes are $650 and $3,900 respectively.
Determine the monthly payment.
Answer: $__________ per month
7.) A small business office building was purchased by taking out a loan of $390,000 at 4% interest for 30
years. An escrow account will be set up. Annual insurance and property taxes are $1,300 and $7,250
respectively. Determine the monthly payment.
Answer: $__________ per month
Business Math – Loans (Worksheet #2) “Compute Loan Payments and Determine Cost to Borrow”
8.) In the late 70's and early 80's interest rates on home loans in the U.S. were in the double digits,
sometimes as high as 15% APR or greater.
Put yourself in the position of a potential homeowner in Sept. of 1979 when interest rates where 15.5%.
a.) If you bought a house for $65,000 at 15.5%, what would have been your monthly payment and total
interest paid if the loan was for 30 years? B.) Run the same numbers again, only this time use 5.5%
which is typical modern‐day lending rate.
a.) Monthly Payment = $__________ b.) Monthly Payment = $__________
a.) Total Interest Paid = $__________ b.) Total Interest Paid = $__________