1. Loans and Savings Accounts

2. Loans Loan review: Home costs $220,000 and you put down 10% so you need a $200,000 loan. You get a 30 year fixed mortgage at 4.0% APR. Payment? Total interest over the life of the loan? 5/1 year ARM Under water Month Beginning BalancePaymentInterestPrincipalEnd Balance

5. Savin’ Up Last we left saving….Activity 2! Starting with $10,000 at age 20 and increasing by 10.7% every year are you a millionaire when you retire at 67? Earth to reality… chase.com

6. Calculating Your Savings New Value=P*(1+r/n)^(nY) P = beginning balance r = annual interest rate n = compounding frequency (1=annually, 4 = quarterly, 12 = monthly) Y = number of years

7. Example You deposit $1000 into a savings account that has an annual percentage rate of 0.01% compounded monthly. What is your balance after the first year? New Value=P*(1+r/n)^nY New Value =1000*(1+(0.0001/12))^(12*1)=$1000.10 What is the annual percentage yield? What is your balance after 5 years? How long would it take for you to make $3?

8. Logarithms 1. log 10 x = x 2. log a x = x * log a

9. New Value=P*(1+r/n)^(nY) 1003 = 1000*(1+0.0001/12)^12Y Divide by 1000 1.003 = (1.00000833)^12Y Take log of both sides Log 1.003 = log(1.00000833)^12Y Follow rule #2 Log 1.003 = 12x* log(1.00000833) Divide by log(1.00000833) and 12 to isolate Y 29.97 years to make $3

10. If you had $1000….