I can calculate the amount financed on an installment loan. I can find the monthly payment.

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Presentation transcript:

I can calculate the amount financed on an installment loan. I can find the monthly payment.

Vocabulary & Formulas Installment Loan: repaid in several equal payments over a specific time. Down Payment: portion of the cash price. Down Payment = Cash Price x Percent Amount Financed: the portion of the cash price you owe after making the down payment. Amount Financed = Cash Price – Down Payment. Monthly Payment = (Amount Financed ÷ 100) x Value from table on p. 799

Example 1 Big Screen TV Cash Price: $1, % Down Payment Down Payment = Cash Price x Percent = $1, x.10 = = $ Amount Financed = Cash Price – Down Payment = $1, $ = $1,799.99

To find the monthly payment we will use p. 799 chart on simple interest installment loans. The big screen TV can be financed for 12 months at 8%. From the table: 8.70 Monthly Payment = (Amount Financed ÷ 100) x Value from table = ($1, ÷ 100) x 8.70 = $ x 8.70 = $ monthly

Example 2 New Carpeting Cash Price: $ % Down Payment 18% Interest for 6 months

Down Payment = Cash Price x Percent = $3450 x.15 = $ Amount Financed = Cash Price – Down Payment = $ $ = $2, From table: Monthly Payment = (Amount Financed ÷ 100 ) x Value from table = ($2, ÷ 100) x = $29.33 x = $ monthly!

B19: p. 289 First do #11-14 & #19 then work on #15-#18. On #15-#18 you must find the down payment, amount financed, and monthly payment. Use 12% for 24 months as the financing terms on each.