# Consumer Credit - PowerPoint PPT Presentation

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Consumer Credit. Review for quiz tomorrow. What we covered:. Saving & Rounding Finding a down payment Layaway Plans Finding the finance charge (interest) Expressing the finance charge algebraically Monthly payments Combining this with previous material . Saving & Rounding.

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Consumer Credit

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## Consumer Credit

Review for quiz tomorrow

### What we covered:

• Saving & Rounding

• Finding a down payment

• Layaway Plans

• Finding the finance charge (interest)

• Expressing the finance charge algebraically

• Monthly payments

• Combining this with previous material

• ### Saving & Rounding

• You want to purchase a \$2,500 television. You are willing to save \$275 per month. How long will it take for you to save up for the television?

• You purchase an electric keyboard that costs \$2,344. You can afford to save \$150 per month. How long will it take?

### Finding a down payment

• You want to purchase a house for \$250,000. You are required to pay a down payment of 20%. How much is your down payment?

• You purchase a dining room set for \$5,100. You sign up for an installment plan, which requires an 18% down payment. How much is the down payment?

### Layaway plans

You purchase a bicycle that sells for \$2,500. It requires a 25% down payment and monthly payments over the next 3 years of \$85.75. How much is the finance charge?

down payment =

( \$2,500) x (0.25)

= \$625

Monthly payments:

(\$85.75) (36)

= \$3,087

Total Paid:

\$625 + \$3,087

= \$3,712

Finance Charge:

\$3,712 - \$2,500

= \$1,212

The price of a stove is “s” dollars. You make a 10% down payment for a 1 ½ year installation purchase. The monthly payment is “m” dollars. Express the finance charge algebraically.

down payment =

10% of s

= 0.1s

Monthly payments:

m dollars for 1 ½ years

= 18m

Finance Charge:

Paying Price – Selling price

= 18m

+ 0.1s

- s

### Monthly Payments

• You purchase a video game system that costs a total of \$350. At the time of purchase, you are required to pay a down payment of 12%. The installment plan you agree to requires a minimum of \$5 monthly payment and offers no interest for 2 years. If you make the minimum payment every month, how much must your last payment be to avoid paying interest?

down payment =

( \$350) x (0.12)

= \$42

Monthly payments:

(\$5) (23)

= \$115

Total Paid:

\$115 + \$42

= \$157

Last Payment:

\$350 - \$157

= \$193

### Combining Material

• You have \$50,000 in the bank earning 8% simple interest. You plan to use this money to purchase a car with a down payment of \$450. Will your monthly interest be enough to pay for the down payment?

Simple Interest: I = Prt

I = (50,000) (.08) (1/12)

I = \$333.33

This will not be enough to cover the down payment.

### Combining Material

• You have \$50,000 in the bank earning 5% simple interest. You plan to use this money to purchase a car with monthly payments of \$200. Will your monthly interest be enough to pay your monthly payment?

Simple Interest: I = Prt

I = (50,000) (.05) (1/12)

I = \$208.33