1.7 Amortization and annuities

1.7 Amortization and annuities Quiz

IB Maths: Applications and Interpretation SL: Quiz

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5 questions, one answer each

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1. A loan is repaid with monthly payments for 3 years. What is $N$ ?
- A. 12
- B. 36
- C. 3
- D. 432
2. A loan is repaid in full at the end of the term. What is $FV$ in the GDC?
- A. The amount borrowed
- B. The total interest
- C. The monthly payment
- D. $0$
3. A loan of 5 000 USD at 6% compounded monthly is repaid over 2 years by end-of-month payments. Which is the payment?
- A. 221.60 USD
- B. 208.33 USD
- C. 250.00 USD
- D. 300.00 USD
4. A loan of 8 000 USD is repaid by 36 payments of 250 USD. What is the total interest?
- A. 9 000 USD
- B. 250 USD
- C. 1 000 USD
- D. 8 000 USD
5. Solving for $N$ gives $56.9$ for a loan. Why is the answer $57$ payments?
- A. $56$ payments would not clear the loan, so a whole number above $56.9$ is needed
- B. Because $56.9$ rounds to $57$ to 2 s.f. only
- C. Because the first payment is always missed
- D. Because the interest rate is rounded up