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Your Money and and Your Math Chapter 13 1. Credit Cards and Consumer Credit 13.2 2.

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Presentation on theme: "Your Money and and Your Math Chapter 13 1. Credit Cards and Consumer Credit 13.2 2."— Presentation transcript:

1 Your Money and and Your Math Chapter 13 1

2 Credit Cards and Consumer Credit

3 You can save money if you know the following: interest rate annual fee fixed variable grace period finance charge Credit Cards 3

4 Find the new balance, assuming that the bank charges 1½% per month on the unpaid balance. Previous New BalancePaymentPurchases 1. $ $10.00 $ $ $75.00 $ Exercises 4

5 1. Balance = $  $10.00 = $90.00 Finance Charge = $90.00  = $1.35 New Balance = $ $ $50.00 = $ Balance = $  $75.00 = $ Finance Charge = $  = $4.56 New Balance = $ $ $ = $

6 Use the following rates and payments table to find the following: a.finance charge for the month b.new balance c.the minimum monthly payment 1. Previous New Balance Purchases $271 $91 6

7 Finance Charge = $  = $4.07 New Balance = $ $ $4.07 = $ Minimum Monthly Payment = 0.05  ($366.07)=$18.30 Solution 7

8 2. Previous New Balance Purchases $760 $80 8

9 Bill Seeker bought a boat costing $8500 with $1500 down, the balance plus add-on interest to be paid in 36 monthly installments. If the add-on interest was 18%, find a.the total interest charged. b.the monthly payment to the nearest dollar. Exercise 9

10 Solution 10

11 a. Ordinary Annuity: b. Annuity Due: S = future value of annuity R = rate of payment 11

12 Ordinary Annuity: an account which receives regular periodic deposits at the end of each compounding period. Tyler has set up an ordinary annuity account and will be making monthly deposits of $ with deposits earning 5.2% per year compounded monthly. Find a.the value of the annuity in 12 years. b.the total deposits Tyler will make. c.the interest earned. 12

13 c. Earned interest = $29,  $21, = $8,

14 Annuity Due: an account which receives regular periodic deposits at the beginning of each compounding period. Find the future value of an annuity due, if payments are made of $350 and interest is 4.25% compounded quarterly for 21 years. 14

15 Find the present value of an ordinary annuity, if payments are made of $475 at the end of each quarterly period for 28 years at 8.00% compounded quarterly. 15

16 Find the amount of each payment to be made into a sinking fund so that enough money will be able to pay off a loan of $29,250 due in 15 years if money is earns 7.25% compounded monthly. Assume this to be an ordinary annuity. 16

17 If Russell wanted to start making payments today, what would be the amount of each payment into a sinking fund so that enough money will be able to pay off a loan of $18,300 due in 14 years if money is earns 4.00% compounded quarterly. 17 END


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