Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table....
-
Upload
katharine-skilton -
Category
Documents
-
view
215 -
download
0
Transcript of Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table....
![Page 1: Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table. Compute monthly payments using a formula. Compute finance.](https://reader036.fdocuments.us/reader036/viewer/2022062417/551b7f2f550346167e8b495e/html5/thumbnails/1.jpg)
Financial Algebra© Cengage/South-Western Slide 11
4-2
LOANS
Read monthly payments from a table.
Compute monthly payments using a formula.
Compute finance charges on loans.
OBJECTIVES
![Page 2: Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table. Compute monthly payments using a formula. Compute finance.](https://reader036.fdocuments.us/reader036/viewer/2022062417/551b7f2f550346167e8b495e/html5/thumbnails/2.jpg)
Financial Algebra© Cengage Learning/South-Western Slide 22
promissory note principal annual percentage rate cosigner life insurance prepayment privilege
prepayment penalty wage assignment wage garnishment balloon payment lending institution collateral
Key Terms
![Page 3: Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table. Compute monthly payments using a formula. Compute finance.](https://reader036.fdocuments.us/reader036/viewer/2022062417/551b7f2f550346167e8b495e/html5/thumbnails/3.jpg)
Financial Algebra© Cengage Learning/South-Western Slide 33
Example 1Example 1
What is the monthly payment for a $4,000 two-year loan with an APR of 8.50%?
![Page 4: Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table. Compute monthly payments using a formula. Compute finance.](https://reader036.fdocuments.us/reader036/viewer/2022062417/551b7f2f550346167e8b495e/html5/thumbnails/4.jpg)
Financial Algebra© Cengage Learning/South-Western Slide 44
Example 2Example 2
What is the total amount of the monthly payments for a $4,000, two-year loan with an APR of 8.50%?
![Page 5: Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table. Compute monthly payments using a formula. Compute finance.](https://reader036.fdocuments.us/reader036/viewer/2022062417/551b7f2f550346167e8b495e/html5/thumbnails/5.jpg)
Financial Algebra© Cengage Learning/South-Western Slide 55
EXAMPLE 3EXAMPLE 3
Find the finance charge for a $4,000, two-year loan with an 8.5% APR?
![Page 6: Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table. Compute monthly payments using a formula. Compute finance.](https://reader036.fdocuments.us/reader036/viewer/2022062417/551b7f2f550346167e8b495e/html5/thumbnails/6.jpg)
Financial Algebra© Cengage Learning/South-Western Slide 66
Karl is borrowing x dollars over a three-year period. The monthly payment is y dollars. Express his finance charge algebraically.
CHECK YOUR UNDERSTANDING
![Page 7: Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table. Compute monthly payments using a formula. Compute finance.](https://reader036.fdocuments.us/reader036/viewer/2022062417/551b7f2f550346167e8b495e/html5/thumbnails/7.jpg)
Financial Algebra© Cengage Learning/South-Western Slide 77
Monthly Payment FormulaMonthly Payment FormulaMonthly Payment FormulaMonthly Payment Formula
M = monthly paymentp = principalr = interest ratet = number of years
112
1
121
1212
12
t
t
r
rrp
M
![Page 8: Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table. Compute monthly payments using a formula. Compute finance.](https://reader036.fdocuments.us/reader036/viewer/2022062417/551b7f2f550346167e8b495e/html5/thumbnails/8.jpg)
Financial Algebra© Cengage Learning/South-Western Slide 88
EXAMPLE 4EXAMPLE 4
Mark bought a new car. The total amount he needs to borrow is $28,716. He plans on taking out a 4-year loan at an APR of 5.12%. What is the monthly payment?
![Page 9: Financial Algebra © Cengage/South-Western Slide 1 4-2 LOANS Read monthly payments from a table. Compute monthly payments using a formula. Compute finance.](https://reader036.fdocuments.us/reader036/viewer/2022062417/551b7f2f550346167e8b495e/html5/thumbnails/9.jpg)
Financial Algebra© Cengage Learning/South-Western Slide 99
Find the monthly payment for a $1,000, one-year loan at an APR of 7.5%.
CHECK YOUR UNDERSTANDING