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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.

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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**Lesson Objective**Calculate the down payment and the amount financed on an installment loan. Content Vocabulary • installment loan installment loan A loan you repay in equal payments over a specified period of time. down payment A portion of the cash price of an item you are purchasing which you pay before financing the rest on credit, usually required when purchasing an item with an installment loan. amount financed The portion of the cash price owed after making the down payment. • down payment • amount financed**Lesson Objective**Calculate the monthly payment, total amount repaid, and finance charge on an installment loan. Content Vocabulary • annual percentagerate (APR) 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 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 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**Single-Payment Loans Amount FinancedFinance ChargeTotal Payment Installment Loans Amount FinancedFinance ChargeMonthly Payment Determining the APR All loans will accrue interest. Loans vs. Borrowing Wisely Loans can help pay for things you need, but must be paid back with interest.**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? • $25.50 • $27.80 • $38.60 • $102.30**ALGEBRA Amrit Rashmisrisethi took out a single-payment 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? • 90 days • 100 days • 120 days • 130 days**Robert Hernandez purchased fishing equipment for $438.50. He**made a 15% down payment and financed the remainder. How much did he finance? • $65.78 • $372.73 • $498.50 • $622.39**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? • $560.80 • $806.96 • $1,230.99 • $1,498.64**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. • $17.89 • $79.77 • $84.26 • $214.63**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? • $12.37 • $15.72 • $24.56 • $111.23**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? • $892.37 • $895.43 • $897.05 • $987.50**Michael LeBlanc 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? • $237.91 • $321.90 • $365.09 • $368.71**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 A8 and A9 of the text. • 10.00% • 10.25% • 10.50% • 10.75%**mf(95n + 9)**APR = (12n)(n + 1)(4a + f) 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? m = number of payments; f = finance charge; n = number of scheduled payments; a = amount financed. • 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 1040EZ income tax return. A W-2 tells you how much you earned, and how much employers withheld to pay taxes.**Get Organized**Step 1 • Each year employers send a Wage and Tax Statement called a W-2 to their employees. Keep them organized. • Print out a copy of the 1040EZ income tax return and sample W-2 form.**Explore Your Community**Step 2 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.**Complete Your 1040EZ**Step 3 Complete the 1040EZ income tax return using the sample W-2 form provided.**Evaluate Your Presentation**Step 4 Go to glencoe.com for an evaluation rubric.**End of**Chapter 8 Loans

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