KU Interactive Mathematics
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Financial Problems
 
Question: On exams, how are financial problems graded?
 
Yours Truly answers: Let’s use an example to illustrate what is expected of you as you write solutions.
 
Diane secured a bank loan of $300,000 to help finance the purchase of a loft in the San Francisco Bay area. The term of the mortgage is 30 years and the interest rate is 9% per year compounded monthly on the unpaid balance. What is Diane’s monthly payment?
 
(Solution)
If this problem carried 10 points, it would be distributed as indicated.
Step 1 List the values of variables (2 points)
  P = 300,000, t = 30, r = 0.09, m = 12; i = 0.09/12, n = 360
   
Step 2 Set up a formula with the values in (4 points)
 
   
Step 3 Compute the answer (4 point)
  R = $2413.87 (Diane’s monthly payment)
 
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