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Quiz Tomorrow- Using Plastic Cards How credit scores are determined? What is a good or bad score, example? How does a score affect your payments? Closed end or revolving credit (open) What is layaway? New credit laws for students Cost of using credit- Interest over time Prime Rate- best customers Fed Rate + three (currently.25% = 3% = 3.25% Add more for profit or poor credit Fed rate has been this low for the last two years

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Continued Federal Truth in Lending Act Credit card Cardholders Bill of Rights Act of 2008 Credit Card Reform Rct of 2009 Fair Credit Billing Act What is the Annual Percentage Rate? Minimum payments Annual Fees Cash Advances Late Fees Penalty Fees Credit Limits based on Credit Score

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Single Payment Loans- Objective: compute the maturity value and interest rate of a single payment loan 8.1 Page 305 Need Textbook today

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Key Terms Single-payment loan- repayment with one payment after a specific period of time. Example: a business needs to borrow money to its payroll or pay for inventory and supplies Promissory Note- written promise to pay a certain sum of money on a specific date in the future Maturity Value- total amount you must repay (includes both the interest and principal) Term- length of the loan

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Calculation of Interest Ordinary Interest – based on a 360 day year Exact interest – based on a 365 day year

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Key Formulas

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Example One page 305 Steps on page 306

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Concept Check page 306 Problem One: 13.50 613.50 Problem Two: 111.62 4961.62

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Closure Construction Loan story– how does a construction loan work. – You are responsible for the interest payments as the loan is being dispersed to the contractor. The more the borrow, the more the interest payment will become – Eventually this stops and you and bank will have a mortgage to agree on.

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Concept Check 3, page 306 Find the interest 50,000 = 548,048 x.09 x t/365 50,000 = 49,324.32 x t / 365 50,000 x 365 = 49324.32 t 18,250,000 = 49,324.32 t 370 = t

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Homework Complete review problems 5,7 on page 307 (check answers in back of book) Complete problems, 9, 10

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Quick Quiz– 5 points Jeff borrowed $1,600 to buy a pedigreed dog. He agrees to repay the loan in 120 days at an ordinary interest rate of 7.5%. What is the maturity value of the loan? Show setup I = 1600 x.075 x 120/360 I= 40, MV = 1640

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Answers 5) 9.67, 1969.67 7) 656.04, 10,331.04 9) 403.20, 8,803.20 10) 24,864, 24,852.16

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DO NOW: What attitudes do people have about the use of credit? 1---------------------------------------------------------10 Always pay cash, Credit.

DO NOW: What attitudes do people have about the use of credit? 1---------------------------------------------------------10 Always pay cash, Credit.

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