Early Payoff of Loans. Payment is first applied to interest owed. Then,the balance is used to reduce the principal. 1. Find the simple interest due from.

Slides:

Advertisements

Similar presentations

Chapter 3 Mathematics of Finance

Advertisements

Cost of credit 18-2.

Amortized Loans (MAT 142) Amortized Loans.

AAA 8.4 SWLT: Use Interest formulas in Installment Buying.

McGraw-Hill/Irwin ©2011 The McGraw-Hill Companies, All Rights Reserved Chapter 10 Simple Interest.

Simple and Compound Interest

Future Value, Present Value and Interest Rates

Simple Interest SWBAT find simple interest ; find the total amount earned or due; find the rate of interest; find the time that principal is left on deposit.

Earning Credit. Compelling Question Have you ever borrowed money from someone and not repaid it? Or has anyone ever borrowed money from you and not repaid.

Simple Interest 7th Grade Math.

Chapter 5 Section 5.4 Amortized Loans. An amortized loan is a type of investment (for the loaner) in which the amount of the loan, plus the interest is.

HOW CREDIT CARDS WORK What you need to know about credit cards- including what credit cards companies can and can’t do, and what information they have.

Chapter Ten SIMPLE INTEREST Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

Debt 1. Interest rate: Annual Percentage Rate APR 2.

Unit 5 Seminar: Consumer Credit.  Installment Loans  Estimated Annual Percentage Rate (APR)  Refund Fractions (when a loan is paid off early)  Open-ended.

Chapter 11 Section 2 - Slide 1 Copyright © 2009 Pearson Education, Inc. AND.

Copyright 2013, 2010, 2007, Pearson, Education, Inc. Section 11.2 Personal Loans and Simple Interest.

Consumer Math p Definitions  Down payment – part of the price paid at the time of purchase  Financed – borrowed  Mortgage – a property loan.

Simple Interest (MAT 142) Simple Interest.

Introducing the Mathematics of Finance

Chapter 10 Simple Interest McGraw-Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 10 Simple Interest. Chapter 10 Simple Interest.

1 LoansLoans When we calculate the annual payment of a loan (A), the payment is actually composed of interest and payment on principal. The mechanics are.

Regular Deposits And Finding Time. An n u i t y A series of payments or investments made at regular intervals. A simple annuity is an annuity in which.

7-8 simple and compound interest

Chapter 3 Mathematics of Finance Section 1 Simple Interest.

Section 1.1, Slide 1 Copyright © 2014, 2010, 2007 Pearson Education, Inc. Section 8.5, Slide 1 Consumer Mathematics The Mathematics of Everyday Life 8.

LESSON 5 SIMPLE DISCOUNT NOTE.

Mortgage Refinancing Decision Falling interest rates create opportunities for refinancing because the option is now “in the money”. “Out of the money”

Interest on Loans Section 6.8. Objectives Calculate simple interest Calculate compound interest Solve applications related to credit card payments.

20.4 Reducing Balance Loans. Reducing balance loans A reducing balance loan is a loan that attracts compound interest, but where regular payments are.

April 9, 2010Math 132: Foundations of Mathematics 8.2 & 8.3 Homework Solutions 459: 35.a. I = (4000)(0.0825)(0.75) = $ b. $4, : 1.A = $10,000(1.

Chapter 10 Simple Interest McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

Lesson 7.8: Simple Interest

McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved Chapter 10 Simple Interest.

1 Simple Interest By: Dilshad Akrayee. 2 Definition  Simple interest is interest that is computed on the original sum.  Formula: Principal amount *

Simple Interest.

Lesson 5-8 Simple Interest.

Chapter 31 The Cost of Credit. Interest Calculations - Determining Factors  Interest Rates – The percentage that is applied to your debt expressed as.

Simple & Compound Interest

Chapter 3 Mathematics of Finance

Aim: Money Matters – Effective Rate & APR Course: Math Literacy Aim: How does money matter? The lowdown on interest rates. Do Now: Annie deposits $1000.

Amortized Loans An amortized loan is a loan paid off in equal payments – consequently, the loan payments are an annuity. In an amortized loan:

Lesson 8-6 Pages Simple Interest Lesson Check 8-5.

Introduction to Business Ch 26: The Cost of Credit.

Warm Up Problem Review Steps on Page 327 Complete problem x.20 = (down payment) 2896 – = (amount borrowed) Monthly payment.

Unit 4 Seminar: Simple Interest

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.

3.1 Simple Interest Definition: I = Prt Definition: I = Prt I = interest earned I = interest earned P = principal ( amount invested) P = principal ( amount.

Percent and Problem Solving: Interest Section 7.6.

Truth in Lending Ch Truth in Lending Act  This law was to help consumers protect their credit  It did 2 main things:  Made all banks use.

Barnett/Ziegler/Byleen Finite Mathematics 11e1 Chapter 3 Review Important Terms, Symbols, Concepts 3.1. Simple Interest Interest is the fee paid for the.

Simple Interest Chapter Ten McGraw-Hill/Irwin

Simple and Compound Interest Video: Simple/ Compound InterestSimple/ Compound Interest Video: A Penny a DayA Penny a Day.

Compound Interest. A = New balance after interest P = Principle amount invested or borrowed. R = Interest Rate usually given as a percent (must changed.

Copyright © 2011 Pearson Education, Inc. Managing Your Money.

Introduction to Business Ch. 25: The Uses of Credit.

Simple and Compound Interest Simple Interest I = Prt Compound Interest A = P(1 + r)

Copyright © 2008 Pearson Education Canada 8-1 Chapter 8 Simple Interest Applications Contemporary Business Mathematics With Canadian Applications Eighth.

Ms. Young Slide 4-1 Unit 4C Loan Payments, Credit Cards, and Mortgages.

Aim: Money Matters: Home Ownership Course: Math Literacy Aim: How does money matter? Home ownership – the big Kahuna! Do Now:

Simple and Compound Interest Unit 4 - Investing. Determining Simple Interest I = p * r * t Interest = Principle X Rate X Time ( in years)

Compounding Interest What does this mean for us?.

Math in Our World Section 8.4 Installment Buying.

Section 13.2 Loans. Example 8 Find the future value of each account at the end of 100 years if the initial balance is $1000 and the account earns: a)

8.1 Single-Payment Loans Single-Payment Loan: a loan that you repay with one payment after a specified period of time. ◦ A promissory note is one type.

Compound Interest. A = New balance after interest P = Principle amount invested or borrowed. R = Interest Rate usually given as a percent (must changed.

Personal Loans and Simple Interest

Chapter 12 Business and Consumer Loans

Problems Involving Percents

Presentation transcript:

Early Payoff of Loans

Payment is first applied to interest owed. Then,the balance is used to reduce the principal. 1. Find the simple interest due from the date the loan was made until the date the partial payment is made. (I = PRT) 2. Subtract this interest from the amount of the payment. 3. Any difference is used to reduce the principal.

4. Treat additional partial payments in the same way, always finding interest on only the unpaid balance after the last partial payment. 5. The remaining principal plus interest on this unpaid principal is then due on the due date of the loan.

A 200-day note, signed on April 7 for $48,300, has a rate of 9% compounded annually. A payment of $12,000 was made on June 25. (A) Find the balance owed on the principal on June 25 and (B) Find the amount due at maturity.

 A 120-day note has a face value of $7500 and a rate of 11.5%. A partial payment of $1700 is made after 40 days.  A) Find the balance owed on the principal after the partial payment.  B) Find the amount due at maturity.

 Allows a lender to earn more of the finance charge during the early months of the loan.  The borrower pays more interest in the early months, so if they pay off the loan early, more interest is paid.  The portion of the finance charge that has not yet been earned by the lender is called the UNEARNED INTEREST.

U = F x N x (1 + N) P (1 + P) U = unearned interest N = # of payments remaining P = original # of payments F = finance charge

Simplot Maps has a signed note with a face value of $24,000 that requires 20 monthly payments of $ The manager pays the debt in full after 12 payments. A) Find the finance charge B) Find the amount of unearned interest C) Find the amount needed to repay the loan in full using the Rule of 78

Tim O’Murphy borrows $2100 to buy a riding lawn mower and agrees to make 12 monthly payments of $ each. He pays the debt in full after 6 months. A) Find the finance charge B) Find the amount of unearned interest C) Find the amount needed to repay the loan in full using the Rule of 78.