View
97
Download
1
Category
Tags:
Preview:
DESCRIPTION
SECTION. 8-3. pp. 290-293. Simple Interest Installment Loans. Figure out: monthly payment on an installment loan total amount repaid on an installment loan finance charge on an installment loan. Section Objective. Key Words to Know. simple interest installment loan (p. 290) - PowerPoint PPT Presentation
Citation preview
Simple Interest Installment Loans
pp. 290-2938-3SECTIONSECTION
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
2
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Section ObjectiveSection ObjectiveFigure out:
• monthly payment on an installment loan
• total amount repaid on an installment loan
• finance charge on an installment loan
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
3
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
simple interest installment loan (p. 290)
A loan repaid with equal monthly payments.
annual percentage rate (p. 290)
An index showing the cost of borrowing money on a yearly basis, expressed as a percent.
Key Words to KnowKey Words to Know
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
4
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Monthly Payment =
Amount of Loan ÷ $100 × Monthly Payments for a $100 Loan
Formula 1Formula 1
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
5
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Total Amount Repaid =
Number of Payments × Monthly Payments
Formula 2Formula 2
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
6
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Finance Charge = Total Amount Repaid – Amount Financed
Formula 3Formula 3
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
7
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
A Picture Perfect Loan p. 290A Picture Perfect Loan p. 290
What do you think a bank looks for in a client who wants to take out a personal loan?
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
8
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Carla Hunt obtained an installment loan of $1,800.00 to purchase some new furniture. The annual percentage rate is 8 percent. She must repay the loan in 18 months.
What is the finance charge?
Example 1Example 1
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
9
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Find the monthly payment.
Amount of Loan ÷ $100 × Monthly Payments for a $100 Loan
$1,800.00 ÷ $100.00 × $5.91 = $106.38
Example 1 Answer: Example 1 Answer: Step 1Step 1
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
10
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Find the total amount repaid.
Number of Payments × Monthly Payment
18 × $106.38 = $1,914.84
Example 1 Answer: Example 1 Answer: Step 2Step 2
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
11
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Find the finance charge.
Total Amount Repaid – Amount Financed
$1,914.84 – $1,800.00 = $114.84
Example 1 Answer: Example 1 Answer: Step 3Step 3
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
12
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Tulio and Lupe Fernandez purchase a refrigerator with an installment loan that has an APR of 12 percent. The refrigerator sells for $1,399.99. The store financing requires a 10 percent down payment and 12 monthly payments.
What is the finance charge?
Example 2Example 2
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
13
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Find the amount financed.
Selling Price – Down Payment
$1,399.99 – (0.10 × $1,399.99)
$1,399.99 – $140.00 = $1,259.99
Example 2 Answer: Example 2 Answer: Step 1Step 1
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
14
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Find the monthly payment. (Refer to the Monthly Payment on a Simple Interest Installment Loan of $100 on page 799 in your textbook).
Amount of Loan ÷ $100 × Monthly Payment for a $100 Loan
$1,259.99 ÷ $100.00 × $8.88 = $111.887 or $111.89
Example 2 Answer: Example 2 Answer: Step 2Step 2
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
15
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Find the total amount repaid.
Number of Payments × Monthly Payment
12 × $111.89 = $1,342.68
Example 2 Answer: Example 2 Answer: Step 3Step 3
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
16
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
Find the finance charge.
Total Amount Repaid – Amount Financed
$1,342.68 – $1,259.99 = $82.69
Example 2 Answer: Example 2 Answer: Step 4Step 4
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
17
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
A new heating and air conditioner will cost the Sangjun family $4,800. They make a down payment of 20 percent and finance the remaining amount. They obtain an installment loan for 36 months at an APR of 14 percent.
Practice 1Practice 1
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
18
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
a. What is the down payment?
b. What is the amount of the loan?
c. What are the monthly payments?
d. What is the finance charge?
Practice 1 (cont.)Practice 1 (cont.)
• Click to edit Master text styles
• Second level
• Third level
• Fourth level
• Fifth level
19
SECTION
Copyright © Glencoe/McGraw-Hill
8-3
a. Down payment: $960
b. Amount of the loan: $3,840
c. Monthly payments: $131.33
d. Finance charge: $887.88
Practice 1 AnswerPractice 1 Answer
Simple Interest Installment Loans
8-3END OF SECTIONEND OF SECTION
Recommended