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Warm Up Problem

Warm Up Problem. Review Steps on Page 327 Complete problem 20 2896 x .20 = 579.20 (down payment) 2896 – 579.20 = 2316.80 (amount borrowed) Monthly payment = $201.53 201.53 x 12 = 2148.36 (amount Repaid) FC = 2418.36- 2316.80 = 101.56. Compute the final payment. 8.5 page 319 .

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Warm Up Problem

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  1. Warm Up Problem • Review Steps on Page 327 • Complete problem 20 • 2896 x .20 = 579.20 (down payment) • 2896 – 579.20 = 2316.80 (amount borrowed) • Monthly payment = $201.53 • 201.53 x 12 = 2148.36 (amount Repaid) • FC = 2418.36- 2316.80 = 101.56

  2. Compute the final payment 8.5 page 319

  3. Final payment • Paying off a loan early saves interest and future income • “10-day pay-off”

  4. Equations • Interest = Principal x Rate x Time • Final Payment = Previous Balance + current month’s interest • Interest saved = Total payback – (sum of previous payments + Final Payment)

  5. Example One page 319 • What is the previous balance • 913.70 (3rd payment) • What is the interest? • 913.70 x .12 x 1/12 = 9.14 (for 4th month) • Find the final payment • (913.70 + 9.14) balance plus interest’ • Concept check 1: • 824.20

  6. Example 2, page 320 • Use example 1, • How much do they save paying off the loan early? • Find the interest saved: • Total payback-(sum of previous payments + Final Payment) • (6 x 310.50) – ( (3 x 310.50) + 922.84)) • What you would have paid – what you did pay

  7. Concept check 2 page 320 • (12 x 106.56) – (( 4 x 106.56) + 824.20)) • 1,278.72 – (426.24 + 824.20) • 1,278.72 – 1,250.44 • 28.28 (saved)

  8. Check you work on problem 8, page 321 • Answer: • A 42.35 • B 5,124.56 • C 407.44

  9. Homework page 321 • Problem 9 • Show the steps with equations for full credit • Review on-line chapters 8.1- 8.5 • www. Glencoe.com • Link on my website • Test on chapter 8 on ______________.

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