Loans- Chapter 8Do Now- Jane Dimas obtained a single-payment loan of $420 to pay a repair bill that she did not have the cash for. She agreed to pay back the loan in 90 days at an interest rate of 12.75% exact interest. What is the maturity value of her loan?Exact interest is = 365 daysI = P x R x T$420 x .1275 x 90/365 =$13.20 interest$420 principal borrowed + $13.20 interest owed=$433.20 maturity value (amount she has to pay back!)

Assignment:

Workbook P.53 #1-4

Loans- Chapter 8Do Now- Anita Sloane’s bank granted her

a single-payment loan of $72,000 for 91 days at 12% ordinary interest. What is the maturity value of the loan?

Ordinary interest = 360 daysI = P x R X T$72,000 x .12 x 91/360=$2,184 interest$72,000 principal + $2,184 interest=$74,184 maturity value (amount

that must be paid back in 91 days)

Assignment:

Workbook P.53 #5-7

Loans – Chapter 8Do Now- What is an installment loan? Can you give any examples? An installment loan is a loan that is paid back in equal installments over a set period of time. People will usually give a down payment up front in order to lower their monthly payments. Home loans, car loans and college loans are popular types of installment loans.

Notes: Installment and Simple Interest Loans•Down Payment- The amount of $$$ you put down at the beginning of the loan to lower your monthly payments.

•Amount Financed- Price of item you are buying – down payment.

•Monthly Payment- The amount of the bill you will receive every month. It is fixed, meaning it will not change.

•Finance Charge- The total amount you repay on the loan – the amount financed.

Do NowTakesha Quintero is buying a new refrigerator for $1399. She makes a down payment of $199 and financed the rest. How much did she finance?

Amount financed =Cash price – Down payment

$1399 - $199 = $1200 financed

Do NowRebecca Clay purchased a washer

and dryer for $1140. She used the store’s installment credit plan to pay for the items. She made a 20% down payment and financed the rest. What amount did she finance?

Cash price – down payment$1140 – (1140 x .20)$1140 - $228 = $912 down payment

Do NowJulio Fernandez purchases a stove

with an installment loan that has an APR of 12%. The stove sells for $1399.99. The store requires a 10% down payment and 12 monthly payments. What is the finance charge?

Step 1: Find the amount financed$1399.99 – (.10 x $1399.99)$1399.99 - $140 = $1259.99

Step 2: Find the monthly paymentRefer to the chart on page 54 for this!(Amount of loan / $100) x monthly

payment for a $100 loan($1259.99/$100) x $8.88 from chart= $111.89 monthly paymentStep 3: Find the total amount repaid12 month of payments x $111.89

monthly payment=$1342.68Step 4: Find the finance charge$1342.68 x $1259.99=$82.69 finance charge

Assignment:Workbook Page 54, #1-

3

Do NowTurn to workbook p.54, #3 (Do on separate sheet

of paper)

a)$12,000 / $100 =120

b)Look on the chart 12 months, 10% APRThe number you find is 8.798.79 x 120 = $1054.80 monthly payment

c) 12 monthly payments x $1054.80=$12,657.60 total amount paid back

d) Finance Charge = $12,657.60 - $12,000= $657.60 finance charge (the cost of borrowing the $$)

Assignment:Workbook p.54, # 4

& 5

Loans- Ch. 8

Do Now- Sam Garcia obtained a 12-month loan from her credit union for $1500 at a rate of 12%. Her monthly payment is $133.20. For the first payment:

a) What is the interest?$1500 x .12 x 1/12 =$15 interest

b) How much is the payment to principal?$133.20 - $15 = $118.20

c) What is the new balance?$1500 - $118.20 =$1381.80 new balance

Do NowJames Connor took a 24 month loan of

$7,000 from his bank at a rate of 8.75%. His first monthly payment is $211.56. For the first payment:

a) What is the interest?$7000 x .0875 x 1/12= $51.04 interest

b) What is the payment to principal?=$211.56 - $51.04= $160.52 payment to principal

c) What is the new balance?=$7,000 - $160.52= $6839.48 new balance

Assignment:Workbook Page 55,

#1-3

Do NowTurn to your notebook, page 55, #4

Patricia Nichols took out a $4,000 simple interest loan at 12 % for 12 months. After 5 payments, the balance was $2392.16. She pays the loan off when the next payment is due.

a) What is the current month’s interest?$2392.16 x .12 x 1/12= $23.92 interest

b) What is the final payment?$2392.16 + $23.92=$2415.92 final payment

Assignment:Workbook, Page 55 #

4 & 5

Do NowNatalie Rubino is planning to borrow $2,800

for a new furnace. Bell Finance will loan her the money for 24 months at a finance charge of $428. What is the APR on this loan?

Please turn to page 56 in WB

$100 x (finance charge / amount financed)$100 x ($428 / $2800)= .15285$100 x .15285 = $15.29

Chart- Go down to 24 months, trace across to # closest to $15.29 and locate the APR on top!

APR is 14%

AssignmentWorkbook, Page 56,

#1-3

Do NowPlease turn to page 56, #3 in your

notebooks

a) $2574.54 - $574.54= $2,000 amount financed

b) $121 monthly payment x 18 months=$2,178 total payments - $2000 financed=$178 finance charge

c) $100 x ($178 / $2000) =8.9 look on chart 18 months, $8.90= 11% APR

AssignmentWorkbook, Page 56, #4 & 5