April 9, 2010Math 132: Foundations of Mathematics 8.2 & 8.3 Homework Solutions 459: 35.a. I = (4000)(0.0825)(0.75) = $247.50 b. $4,247.50 465: 1.A = $10,000(1.

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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( ) 2 = $10,816 $816 in interest earned 2.A = $8,000( ) 3 = $9, $1, in interest earned

April 9, 2010Math 132: Foundations of Mathematics Amy Lewis Math Specialist IU1 Center for STEM Education

April 9, 2010Math 132: Foundations of Mathematics 8.5 Installment Buying Determine the amount financed, the installment price, and the finance charge for a fixed loan. Determine the APR.

April 9, 2010Math 132: Foundations of Mathematics Installment Buying Installment buying is when you repay a loan for the cost of a product on a monthly basis. For example, using a credit card. An installment loan is one that you can pay off with weekly or monthly payments or payments in some other time period. For example, a car loan. What are the advantages of this kind of a loan?

April 9, 2010Math 132: Foundations of Mathematics Fixed Installment Loans A loan that has a schedule for paying a fixed amount each period. Amount Financed = Cash price – Down payment Total Installment Price = Total of all monthly payments + Down payment Finance Charge = Total installment price – Cash price

April 9, 2010Math 132: Foundations of Mathematics Fixed Installment Loans The cost of a new car is $14,000. You can finance the car by paying $280 down and $315 per month for 60 months. –Determine the amount financed. –Determine the total installment price. –Determine the finance charge.

April 9, 2010Math 132: Foundations of Mathematics Annual Percentage Rate APR is the interest rate per year. –The loan with the lowest APR is the one that charges the least interest. –At what rate did we finance our new car?

April 9, 2010Math 132: Foundations of Mathematics Annual Percentage Rate Steps in using an APR Table –Compute the finance charge per $100 financed: Finance charge x $100 Amount financed –Find the row corresponding to the number of payments and find the entry closest to the value in step 1. –Find the APR at the top of the column in which the entry from step 2 is found.

April 9, 2010Math 132: Foundations of Mathematics Annual Percentage Rate Determine the APR for our new car loan.

April 9, 2010Math 132: Foundations of Mathematics Computing Unearned Interest Unearned interest is the amount by which a loan’s finance charge is reduced when the loan is paid off early. Actuarial Method u = unearned interest k = remaining number of scheduled payments (excluding current payment) R = regular monthly payment V = finance charge per $100 for a loan with the same APR and k monthly payment

April 9, 2010Math 132: Foundations of Mathematics Computing Unearned Interest Instead of making the 24 th payment on the car loan, we decide to pay the remaining balance and terminate the loan. –Use the actuarial method to determine how much interest will be saved by repaying the loan early. –Find the payoff amount. Current payment + total of remaining payments – interest saved

April 9, 2010Math 132: Foundations of Mathematics Homework 488: 11 & 12 Work on your project! Next Session: Monday, April 12