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## Student Loans

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**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 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**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**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?**Example 1 Answer: Step 1**Find the ordinary interest owed. Principal × Rate × Time $7,200.00 × 12% × 91/360 = $218.40**Example 1 Answer: Step 2**Find the maturity value. Principal + Interest Owed $7,200.00 + $218.40 = $7,418.40**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?**Example 2 Answer: Step 1**Find the exact interest owed. Principal × Rate × Time $7,200 × 12% × 91/365 = $215.408 or $215.41**Example 2 Answer: Step 2**Find the maturity value. Principal + Interest Owed $7,200.00 + $215.41 = $7,415.41**Practice 1**Single payment loan of $2,750. Interest rate of 11 percent. Exact day of interest: 50. What is the interest owed?**Practice 1 Answer**$41.44**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?**Practice 2 Answer**Interest owed: $1,496.68 Maturity value of loan: $17,878.68