Question 1

Bill is looking to purchase a $30,000 new car with 2% APR financing over 5 years. If he were to pay 20% out of pocket and finance the balance in equal monthly payments, what would be his approximate total cost of financing?

Accepted Answer

The total cost of financing is the total amount of interest paid over the life of the loan. To calculate this, we need to first calculate the monthly payment. The monthly payment can be calculated using the following formula:Monthly payment = (Loan amount * APR) / (1 - (1 + APR)^(-n))where:Loan amount = $30,000APR = 2%n = 5 years * 12 months/year = 60 monthsPlugging these values into the formula, we get:Monthly payment = (30000 * 0.02) / (1 - (1 + 0.02)^(-60))= $500The total cost of financing is then the total amount of interest paid over the life of the loan, which is:Total cost of financing = (Monthly payment * n) - Loan amount= (500 * 60) - 30000= $1,200Therefore, the approximate total cost of financing is $1,200.

Question 2

What are the total expenses?

Accepted Answer

The answer of What are the total expenses? 
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Question 3

What are the total variable expenses?

Accepted Answer

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Question 4

What is the debt-to-income ratio?

Accepted Answer

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Question 5

Jack and Jill are proud new parents. They met while students at Ivy University and already have visions of their new child attending their alma mater in 18 years. Total tuition, room, and board is about $70,000 today, where it was only $27,000 when they graduated 15 years ago. They can expect to receive a long-term average annual return of 8% in their investment portfolio. Approximately how much would they have to save monthly starting now to have the tuition, room, and board (4-year degree) for their new child by freshman year?

Accepted Answer

The answer of Jack and Jill are proud new parents....

Question 6

What is the surplus or deficit?

Accepted Answer

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Question 7

What is the consumer debt-to-income ratio?

Accepted Answer

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Question 8

Which of the following is true about tracking your expenses?

Accepted Answer

All the statements are true regarding tracking expenses. It helps in recognizing routine spending habits, exposes spending patterns, and once aware, individuals can make changes to save money over time.

Question 9

More trips to the store will typically result in ________ money spent.

Accepted Answer

More trips to the store often lead to more opportunities to make purchases, which typically results in more money being spent.

Question 10

What is the savings ratio?

Accepted Answer

The answer of What is the savings ratio? 
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Quiz 2: Tools for Your Financial Journey