Presentation on theme: "OBJECTIVES 4-2 LOANS Read monthly payments from a table."— Presentation transcript:
1OBJECTIVES 4-2 LOANS Read monthly payments from a table. Banking4/6/20174-2 LOANSOBJECTIVESRead monthly payments from a table.Compute monthly payments using a formula.Compute finance charges on loans.Chapter 1
2Key Terms promissory note principal annual percentage rate cosigner life insuranceprepayment privilegeprepayment penaltywage assignmentwage garnishmentballoon paymentlending institutioncollateral
3Example 1What is the monthly payment for a $4,000 two-year loan with an APR of 8.50%?
4Example 2What is the total amount of the monthly payments for a $4,000, two-year loan with an APR of 8.50%?
5Find the finance charge for a $4,000, two-year loan with an 8.5% APR? EXAMPLE 3Find the finance charge for a $4,000, two-year loan with an 8.5% APR?
6CHECK YOUR UNDERSTANDING Karl is borrowing x dollars over a three-year period. The monthly payment is y dollars. Express his finance charge algebraically.
7Monthly Payment Formula M = monthly paymentp = principalr = interest ratet = number of years
8EXAMPLE 4Mark 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?
9CHECK YOUR UNDERSTANDING Find the monthly payment for a $1,000, one-year loan at an APR of 7.5%.