AMDM - Unit 7 Test

Front

What is the formula to calculate monthly payments on a loan?

Back

Monthly Payment = [P * r(1 + r)^n] / [(1 + r)^n - 1], where P = principal, r = monthly interest rate, n = number of payments.

Front

How do you calculate the total cost of a car including tax and fees?

Back

Total Cost = Car Price + (Car Price * Tax Rate) + Fees.

Front

What is the effective interest rate when interest is compounded quarterly?

Back

Effective Interest Rate = (1 + r/n)^(nt) - 1, where r = nominal rate, n = number of compounding periods per year, t = number of years.

Front

What does 'semi-annually' mean in terms of frequency?

Back

Semi-annually means occurring twice a year.

Front

How do you calculate take-home pay after taxes and deductions?

Back

Take-home Pay = Gross Pay - (Taxes + Deductions).

Front

What is the formula for calculating future value of an investment with regular contributions?

Back

Future Value = P * [(1 + r)^nt - 1] / r, where P = monthly contribution, r = monthly interest rate, n = number of contributions.

Front

What is the significance of a down payment in a loan?

Back

A down payment reduces the principal amount of the loan and can lower monthly payments.

Front

How do you calculate the total amount paid on a loan after a certain period?

Back

Total Amount Paid = Monthly Payment * Number of Payments.

Front

What is the difference between simple interest and compound interest?

Back

Simple Interest is calculated only on the principal amount, while Compound Interest is calculated on the principal plus any interest earned.

Front

What is the purpose of saving for retirement?

Back

Saving for retirement ensures financial security and stability in later years when income may be reduced.