A&W MATH 11: PERSONAL LOANS, LINES OF CREDIT, AND …



A&W MATH 11: PERSONAL LOANS, LINES OF CREDIT, AND OVERDRAFTS

A) Vocabulary:

amortization period:

line of credit:

overdraft protection:

payday loan:

default:

ex: Jesse went to MoneyMart to borrow $500. He had to them back $580 after 14 days.

i) What is the annual interest rate for the loan?

ii) what is the daily interest for the loan?

ex: Jesse went to Cash Money to borrow $500 and paid it back with interest 7 days later. The interest rate was 350% per year. How much interest did he pay?

B) What is a personal loan?

-it is a line of credit. It can be secured (ex: borrow money against your house or company…get a lower interest rate) or unsecured line of credit (higher interest rate).

-to make calculations easier, sometimes they use a personal loan calculator (ie: pg 320 in workbook).

-the personal loan calculator is based on interest that is compounded.

ex: Kevin bought an Acura MDX for $65,000. He put a downpayment of $5000, and borrowed the rest at 3%. He hopes to pay it off after 4 years.

i) How much money does he need to borrow?

ii) What are his monthly payments over the 4 years?

iii) What is the total payment for the car?

pg 317 #1-5

-pg 321 #1, 2

-pg 323 #3

-pretest, corrections, test

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