1. Single-Payment Loans pp. 284-286 8-1 SECTION

2. 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 20 8-1 Section Objective Compute: maturity value of a single- payment loan interest rate of a single-payment loan

3. 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 20 8-1 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

4. 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 20 8-1 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

5. 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 20 8-1 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

6. 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 20 8-1 Interest = Principal × Rate × Time Formula 1

7. 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 20 8-1 Ordinary Interest = Principal × Rate × Time ÷ 360 Exact Interest = Principal × Rate × Time ÷ 365 Formula 2

8. 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 20 8-1 Maturity Value = Principal + Interest Owed Formula 3

9. 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 20 8-1 A Picture Perfect Loan p. 284 How might a loan from Chen’s dad be different than a loan from a bank?

10. 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 20 8-1 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

11. 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 20 8-1 Find the ordinary interest owed. Principal × Rate × Time $7,200.00 × 12% × 91/360 = $218.40 Example 1 Answer: Step 1

12. 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 20 8-1 Find the maturity value. Principal + Interest Owed $7,200.00 + $218.40 = $7,418.40 Example 1 Answer: Step 2

13. 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 20 8-1 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

14. 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 20 8-1 Find the exact interest owed. Principal × Rate × Time $7,200 × 12% × 91/365 = $215.408 or $215.41 Example 2 Answer: Step 1

15. 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 20 8-1 Find the maturity value. Principal + Interest Owed $7,200.00 + $215.41 = $7,415.41 Example 2 Answer: Step 2

16. 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 20 8-1 Single payment loan of $2,750. Interest rate of 11 percent. Exact day of interest: 50. What is the interest owed? Practice 1

17. 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 20 8-1 $41.44 Practice 1 Answer

18. 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 20 8-1 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

19. 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 20 8-1 Interest owed: $1,496.68 Maturity value of loan: $17,878.68 Practice 2 Answer

20. Single-Payment Loans 8-1 END OF SECTION