Student Loans Someday you might want to earn

Student Loans Someday you might want to earn a college degree, buy a car, or purchase a home. A loan can help you reach those goals. Why might you consider obtaining a loan?

Lesson Objective Compute the maturity value and interest rate of a single-payment loan. Content Vocabulary single-payment loan promissory note maturity value single-payment promissory maturity value noteloan The A loan written total you promise amount repay you with to pay must one a certain repay payment sum for a of loan. money after aonspecified a specific period date of the in time. future.

Lesson Objective Compute the maturity value and interest rate of a single-payment loan. Content Vocabulary term ordinary interest exact interest term interest ordinary exact interest The amount Interest on a of loan time calculated for whichby a loan is granted. basing the loan’s time period on a 365 -day 360 -day year.

Lesson Objective Calculate the down payment and the amount financed on an installment loan. Content Vocabulary installment loan down payment amount financed installment down amount payment financed loan The A loan portion youofrepay of thethe cash incash equal price payments of owed an item overare you after a making specified purchasing the period down which payment. of time. you pay before financing the rest on credit, usually required when purchasing an item with an installment loan.

Lesson Objective Calculate the monthly payment, total amount repaid, and finance charge on an installment loan. Content Vocabulary annual percentage rate (APR) An index showing the cost of borrowing money on a yearly basis, expressed as a percent.

Lesson Objective Calculate the payment to interest, payment to principal, and new balance. Content Vocabulary repayment schedule Shows the distribution of interest and principal over the life of a loan.

Lesson Objective Compute the final payment when paying off an installment loan. Content Vocabulary final payment Payment on a simple interest loan that consists of the previous balance plus the current month’s interest.

Lesson Objective Determine the annual percentage rate of a loan using a table and a formula.

Summary Borrowing Wisely Loans can help pay for things you need, but must be paid back with interest. Single-Payment Loans Amount Financed Finance Charge Total Payment Installment Loans vs. Amount Financed Finance Charge Monthly Payment Determining the APR All loans will accrue interest.

1. Derek Boone purchased an automobile sound system for $850 and financed it at 12% ordinary interest for 90 days. How much interest did he pay? A. B. C. D. $25. 50 $27. 80 $38. 60 $102. 30

2. ALGEBRA Amrit Rashmisrisethi took out a singlepayment loan for $1, 200 at 8. 3% exact interest. If the loan’s maturity value is $1, 232. 75, for how many days did Amrit take out the loan? A. B. C. D. 90 days 100 days 120 days 130 days

3. Robert Hernandez purchased fishing equipment for $438. 50. He made a 15% down payment and financed the remainder. How much did he finance? A. B. C. D. $65. 78 $372. 73 $498. 50 $622. 39

4. Barbara Morris purchased a dining room table and chairs for $2, 305. 60. She made a 35% down payment and financed the rest. How much was her down payment? A. B. C. D. $560. 80 $806. 96 $1, 230. 99 $1, 498. 64

5. Terri Naujock is purchasing a new computer system for $1, 430. 86 with an installment loan that has an APR of 12%. The store financing requires a 15% down payment and 12 monthly payments. What is the finance charge? The monthly payment is $8. 88 per $100. A. B. C. D. $17. 89 $79. 77 $84. 26 $214. 63

6. Susan Castro obtained a loan of $1, 450 for a new air conditioner for her home. The interest rate is 13% and the monthly payment is $129. 51. What is the interest on the first monthly payment? A. B. C. D. $12. 37 $15. 72 $24. 56 $111. 23

7. Janet Murphy took out a simple interest loan at 9. 5% interest for 12 months. Her previous balance is $890. What is the final payment if the loan is paid off with the next payment? A. B. C. D. $892. 37 $895. 43 $897. 05 $987. 50

8. Michael Le. Blanc took out a simple interest loan at 12. 8% interest for 6 months. His previous balance is $235. 40. What is his final payment if the loan is paid off with the next payment? A. B. C. D. $237. 91 $321. 90 $365. 09 $368. 71

9. Cathy Jones obtained a loan for $1, 300 and promised to repay the loan in 12 months. The finance charge is $73. 32. What is the APR? Use the tables on page A 8 and A 9 of the text. A. B. C. D. 10. 00% 10. 25% 10. 50% 10. 75%

10. ALGEBRA Paul Olson borrowed $1, 000 for six months. The finance charge is $31. 60. To the nearest hundredth percent, what is the annual percentage rate? APR = mf(95 n + 9) (12 n)(n + 1)(4 a + f) m = number of payments; f = finance charge; n = number of scheduled payments; a = amount financed. A. B. C. D. 10. 00% 10. 25% 10. 50% 10. 75%

Doing Your Taxes In this project you will use a sample W-2 form to prepare a 1040 EZ income tax return. A W-2 tells you how much you earned, and how much employers withheld to pay taxes.

Step 1 Get Organized ü Each year employers send a Wage and Tax Statement called a W-2 to their employees. Keep them organized. ü Print out a copy of the 1040 EZ income tax return and sample W-2 form.

Step 2 Explore Your Community Interview two employed individuals in your community. How do they prepare their income tax returns? Ask them for advice on keeping your financial records organized.

Step 3 Complete Your 1040 EZ Complete the 1040 EZ income tax return using the sample W-2 form provided.

Step 4 Evaluate Your Presentation Go to glencoe. com for an evaluation rubric.

End of Chapter 8 Loans