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Warm UP Problem

Warm UP Problem. Use graphic calculator or website What is the monthly payment and finance charge on the following loan? $3,500 – NO Down Payment 12% 30 months 135.62 – Monthly Payment 135.62 x 30 = Amount repaid= 4068.60 568.60 = 4068.60 – 3500 = Finance Charges. 8.4 Installment Loans.

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Warm UP Problem

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  1. Warm UP Problem • Use graphic calculator or website • What is the monthly payment and finance charge on the following loan? • $3,500 – NO Down Payment • 12% • 30 months • 135.62 – Monthly Payment • 135.62 x 30 = Amount repaid= 4068.60 • 568.60 = 4068.60 – 3500 = Finance Charges

  2. 8.4 Installment Loans Objective: calculate the payment to interest, payment to principal, and new balance

  3. Key Terms • Repayment Schedule- shows the distribution of interest and principal over the life of a loan

  4. Paying off a mortgage early! • http://www.yourmoneypage.com/home/bigloan4a.php • www.psecu.com-- current rates and calculator • Monthly Payment = Principal + Interest • P and I • P& I

  5. Example One page 316 • Follow the steps • Find the interest for the first payment: • I = P x R x T • I = 1800 x .08 x 1/12 = 12 • Find P and I = Monthly Payment of 307.08 – 12 = 295.08, where P is $295.08 and I is $12. • New Principal after first payment 1800 – 295.08 = 1504.92 • Concept check 1 • 10.03 ( second months interest) • 297.05 ( second months principal) • 1,207.87 ( new balance at the end of month two)

  6. Example 2, page 317 • Follow Steps • Why is the interest so much less for the 21st payment? • Concept check page 317, problem #4 • 80 • 8000 x .12 x 1/12 = 80 • 32.22 • 3222.44 x .12 x 1/12 = 32.22

  7. Determine the missing amounts • Page 318 • Monthly Payment = Principle + Interest (P & I) • Problem 5 • A. 1,105.44 = Solution: 1200 – 94.56 • Problem 6 • A. 28.83, B. 179.12, C. 3,280.88 Solutions: • A. 3460 x .10 x 1/12 = 28.83 • B. 207.95 – 28.83 = 179.12 • C. 3460 – 179.12 = 3280.88

  8. Closure: How can you save money on an installment loan?? • I= P x R x T • Suggestions • Make larger principal payments • What is the P and I?

  9. Homework page 318 • Complete problems 8- 15 • Solution 8 • 1435.30 – 198.77= 1236.53 • Solution 9 • 213.12- 12.37 = 200.75 • Solution 10 • 1035.78 x .12 x 1/ 12 = 10.36

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