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 PeriodInterestPrincipalBalance 1$583.33$191.97$99,808.03 2$582.21$193.09$99,614.95 3$581.09$194.21$99,420.74 4$579.95$195.34$99,225.39 5$578.81$196.48$99,028.91 6$577.67$197.63$98,831.28 7$576.52$198.78$98,632.50 8$575.36$199.94$98,432.55 9$574.19$201.11$98,231.44 10$573.02$202.28$98,029.16 11$571.84$203.46$97,825.70 12$570.65$204.65$97,621.05 13$569.46$205.84$97,415.21 14$568.26$207.04$97,208.16 15$567.05$208.25$96,999.

4. Paying off a mortgage early! http://www.yourmoneypage.com/home/biglo an4a.php http://www.yourmoneypage.com/home/biglo an4a.php www.psecu.com-- current rates and calculator www.psecu.com-- 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 21 st 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