Single-Payment Loans pp SECTION

Click to edit Master text styles Second level Third level Fourth level Fifth level 2 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 2 of Section Objective Compute: maturity value of a single- payment loan interest rate of a single-payment loan

Click to edit Master text styles Second level Third level Fourth level Fifth level 3 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 3 of single-payment loan (p. 284) A loan that has to be repaid with one payment after a specified period of time. promissory note (p. 284) A written promise to pay a certain sum of money on a certain date in the future. Key Words to Know

Click to edit Master text styles Second level Third level Fourth level Fifth level 4 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 4 of maturity value (p. 284) The total amount that must be repaid on a loan, including the principal borrowed and the interest owed. term (p. 284) The amount of time for which a loan is granted before it has to be repaid. Key Words to Know

Click to edit Master text styles Second level Third level Fourth level Fifth level 5 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 5 of ordinary interest (p. 284) Interest on a loan calculated by basing the time of the loan on a 360-day year. exact interest (p. 284) Interest on a loan calculated by basing the time of the loan on a 365-day year. Key Words to Know

Click to edit Master text styles Second level Third level Fourth level Fifth level 6 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 6 of Interest = Principal × Rate × Time Formula 1

Click to edit Master text styles Second level Third level Fourth level Fifth level 7 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 7 of Ordinary Interest = Principal × Rate × Time ÷ 360 Exact Interest = Principal × Rate × Time ÷ 365 Formula 2

Click to edit Master text styles Second level Third level Fourth level Fifth level 8 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 8 of Maturity Value = Principal + Interest Owed Formula 3

Click to edit Master text styles Second level Third level Fourth level Fifth level 9 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 9 of A Picture Perfect Loan p. 284 How might a loan from Chen’s dad be different than a loan from a bank?

Click to edit Master text styles Second level Third level Fourth level Fifth level 10 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 10 of Anita Sloane’s bank granted her a single- payment loan of $72,000 for 91 days at 12 percent ordinary interest. What is the maturity value of the loan? Example 1

Click to edit Master text styles Second level Third level Fourth level Fifth level 11 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 11 of Find the ordinary interest owed. Principal × Rate × Time $7, × 12% × 91/360 = $ Example 1 Answer: Step 1

Click to edit Master text styles Second level Third level Fourth level Fifth level 12 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 12 of Find the maturity value. Principal + Interest Owed $7, $ = $7, Example 1 Answer: Step 2

Click to edit Master text styles Second level Third level Fourth level Fifth level 13 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 13 of Anita Sloane’s bank granted her a single- payment loan of $72,000 for 91 days at 12 percent exact interest. What is the maturity value of the loan? Example 2

Click to edit Master text styles Second level Third level Fourth level Fifth level 14 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 14 of Find the exact interest owed. Principal × Rate × Time $7,200 × 12% × 91/365 = $ or $ Example 2 Answer: Step 1

Click to edit Master text styles Second level Third level Fourth level Fifth level 15 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 15 of Find the maturity value. Principal + Interest Owed $7, $ = $7, Example 2 Answer: Step 2

Click to edit Master text styles Second level Third level Fourth level Fifth level 16 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 16 of Single payment loan of $2,750. Interest rate of 11 percent. Exact day of interest: 50. What is the interest owed? Practice 1

Click to edit Master text styles Second level Third level Fourth level Fifth level 17 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 17 of $41.44 Practice 1 Answer

Click to edit Master text styles Second level Third level Fourth level Fifth level 18 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 18 of Emily Andrews borrowed $16,382. Her bank granted her a single-payment loan for 286 days at 11.5 percent ordinary interest. What is the interest owed? What is the maturity value of her loan? Practice 2

Click to edit Master text styles Second level Third level Fourth level Fifth level 19 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 8-1, Slide 19 of Interest owed: $1, Maturity value of loan: $17, Practice 2 Answer

Single-Payment Loans 8-1 END OF SECTION