# Aravinda makes \$3450 a month before taxes, and has a monthly car payment of \$350.?

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Aravinda makes \$ 3450 a month before taxes, and has a monthly car payment of \$ 350.
How much will a lender estimate he can spend on a mortgage payment?

Answer: a. \$ 868
b. \$ 966
c. \$ 1207
d. \$ 1625

Elise looks at the figure you produced above and says, “that’s a little rich for
my blood. I think I could scrounge up \$ 5,000 right now, though.” If she puts that into a Certificate of Deposit at her local bank with 6% interest, compounded quarterly, how much will she have in 5 years?

Answer: a. \$ 11,384.79
b. \$ 9,870.43
c. \$ 6,734.28
d. \$ 5,942.06

22

If I put \$ 2,000 in a Certificate of Deposit today, and the interest rate is 5% annually compounded quarterly, what will it be worth in two years?

Answer: a. \$ 2208.97
b. \$ 2100.53
c. \$ 2200.00
d. \$ 2050.25

Ping, a 19-year-old college student, just asked his mother if he could borrow \$ 2,000 because he spent the rest of this semester’s loan money for the
semester on a trip to Hawaii for spring break. His mother thinks he’s being very irresponsible with his money, so she says yes on one condition: she will
charge him a simple interest rate of 10% annually. If he doesn’t pay his mother back until he graduates in two and a half years, how much interest will he
owe her?

Answer: a. \$ 250
b. \$ 400
c. \$ 500
d. None of these

1 Thought on Aravinda makes \$3450 a month before taxes, and has a monthly car payment of \$350.?
1. Reply
SAJJ
May 3, 2011 at 4:31 am

/////
22)a=p(1+i)^n
a=2000(1+(5%/4))^(4*2)
=\$ 2208.97

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