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# Student Loans

Download Presentation ## Student Loans

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1. 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?

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

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

4. Example 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?

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

6. Example 1 Answer: Step 2 Find the maturity value. Principal + Interest Owed \$7,200.00 + \$218.40 = \$7,418.40

7. Example 2 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?

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

9. Example 2 Answer: Step 2 Find the maturity value. Principal + Interest Owed \$7,200.00 + \$215.41 = \$7,415.41

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

11. Practice 1 Answer \$41.44

12. Practice 2 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?

13. Practice 2 Answer Interest owed: \$1,496.68 Maturity value of loan: \$17,878.68