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Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table. Compute monthly payments using a formula. Compute finance charges on loans. OBJECTIVES
Financial Algebra © Cengage Learning/South-Western Slide 2 promissory note principal annual percentage rate cosigner life insurance prepayment privilege prepayment penalty wage assignment wage garnishment balloon payment lending institution collateral Key Terms
Financial Algebra © Cengage Learning/South-Western Slide 3 Example 1 What is the monthly payment for a $4,000 two-year loan with an APR of 8.50%?
Financial Algebra © Cengage Learning/South-Western Slide 4 Example 2 What is the total amount of the monthly payments for a $4,000, two-year loan with an APR of 8.50%?
Financial Algebra © Cengage Learning/South-Western Slide 5 EXAMPLE 3 Find the finance charge for a $4,000, two-year loan with an 8.5% APR?
Financial Algebra © Cengage Learning/South-Western Slide 6 Karl is borrowing x dollars over a three-year period. The monthly payment is y dollars. Express his finance charge algebraically. CHECK YOUR UNDERSTANDING
Financial Algebra © Cengage Learning/South-Western Slide 7 Monthly Payment Formula M = monthly payment p = principal r = interest rate t = number of years
Financial Algebra © Cengage Learning/South-Western Slide 8 EXAMPLE 4 Mark bought a new car. The total amount he needs to borrow is $28,716. He plans on taking out a 4-year loan at an APR of 5.12%. What is the monthly payment?
Financial Algebra © Cengage Learning/South-Western Slide 9 Find the monthly payment for a $1,000, one-year loan at an APR of 7.5%. CHECK YOUR UNDERSTANDING
Chapter 4: Consumer Credit 4.2 Loans. What information do you need to know before taking out a loan? Brainstorm with your groups Make a list of 5 things.
Introduction. Loan - Definitions Whenever you borrow money, you must sign an agreement, called a PROMISSORY NOTE, which sates the conditions of the loan.
Financial Algebra © Cengage/South-Western Slide LOAN CALCULATIONS AND REGRESSION Calculate the present value of a single deposit investment. Calculate.
Section 4.2. Whenever you borrow money, you must sign an agreement. Promissory Note States the conditions of the loan Should read this carefully.
Financial Algebra © Cengage/South-Western Slide CREDIT CARD STATEMENT To identify and use the various entries in a credit card statement. OBJECTIVES.
Monthly Payment Equation Example Mark bought a new car. The total amount he needs to borrow is $28,716. He plans on taking out a 4-year loan at an APR.
Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide EXPLORE COMPOUND INTEREST Understand the concept of getting interest on your.
Chapter © 2010 South-Western, Cengage Learning Credit in America Credit: What and Why Types and Sources of Credit 16.
Financial Algebra © 2011 Cengage Learning. All Rights Reserved. Slide COMPOUND INTEREST FORMULA Become familiar with the derivation of the compound.
Copyright © 2011 Pearson Education, Inc. Managing Your Money.
Financial Algebra © Cengage/South-Western Slide 1 BANKING SERVICES 3-4Explore Compound Interest 3-5Compound Interest Formula 3-6Continuous Compounding.
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Financial Algebra © Cengage/South-Western Slide INTRODUCTION TO CONSUMER CREDIT Become familiar with the basic vocabulary of credit terms. Become.
Financial Algebra © Cengage/South-Western Slide COMPOUND INTEREST FORMULA Become familiar with the derivation of the compound interest formula. Make.
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Financial Algebra © Cengage/South-Western Slide 1 CONSUMER CREDIT 4-1Introduction to Consumer Credit 4-2Loans 4-3Loan Calculations and Regression 4-4Credit.
BUS250 Seminar 6. Key Terms Interest: an amount paid or earned for the use of money. Simple interest: interest earned when a loan or investment is repaid.
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Financial Algebra © Cengage/South-Western Slide HISTORICAL AND EXPONENTIAL DEPRECIATION Write, interpret, and graph an exponential depreciation equation.
Simple and Compound Interest Everybody uses money. Sometimes you work for your money and other times your money works for you. For example, unless you.
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CHAPTER 31 THE COST OF CREDIT. INTEREST CALCULATIONS SIMPLE INTEREST Interest rate x principal x time factor 9% or.09 x $1,000 x 1 year = $90 12% or.12.
Financial Algebra © Cengage/South-Western Slide PURCHASE A HOME Estimate closing costs. Create an amortization table for a fixed rate mortgage. Create.
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Cost of credit Finding interest Borrowing money has a cost Interest (I) is the cost of using someone elses money. The amount of interest paid on.
1 Car Buying Tips and Terms. 2 BEFORE you buy a car… Look over your budget: Transportation needs to be 19% or less of your net income (bus/car/rideshare).
Understanding Car Payments. Mark wants a go-cart. Mark wants a go-cart. A go-cart costs $500. A go-cart costs $500. Mark only has $100. This is his Down.
Chapter 7: Credit Cards and Consumer Loans Garman/Forgue Personal Finance Tenth Edition PPT slide program prepared by Amy Forgue and Ray Forgue.
Financial Algebra © Cengage Learning/South-Western Warm-UpWarm-Up Grab a paper from the back Susan wants to invest her $1,500 into a savings account that.
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