Warm Up Problem Number 11 on page 326 of text book Solution: – Ordinary Interest= P x R x (days/360) – OI = 21,400 x.085 x 120/360 – OI = – Maturity Value = Principal + Interest – 21, = 22,006.33

Section 8.2 Calculate the down payment and the amount financed on an installment loan

Key Terms Installment loan- equal payments over a specified period of time. Usually requires a down payment Down payment- amount required up front to make the credit deal work- remaining amount will be financed (borrowed on credit) – Usually a percentage or set amount – Consider new law changes on home mortgages – Requirements of 20% down payment on a house – Example: 250,000 dollar house would require a down payment of – $50,000

Key formulas Amount Financed = Cash Price – Down Payment Down Payment = Cash Price x Percent Requirement Example one page 308 Concept Check 1 and 2, page 308 – 1800 – 3800

Example Two page 309 Concept check 3 and 4 $272, $1,088 $517.50, 1,207.50

Closure What are the effects of making a larger down payment? Advantages and Disadvantages If you can’t afford to pay cash, then………….???? Purpose of Credit – buy now pay later 20/10 Rule Says…………….. Decide how much to finance?

Homework 5, 7, 9, 11, 13, 15, 17, 19, *21 Page