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| The price of the merchandise that a person is buying |
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| If a person pays part of the cash price at the time of purchase its called the down payment |
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| The balance that is usually paid off in equal montly installments |
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| may also include finance charges, interest, and other types of fees |
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| Private business repayment plans |
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| many business make repayment plans so that the buyer does not have to secure a loan from a bank or other lending institution |
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| The Truth in Lending Laws |
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| requires all interest, finance charges and fees to be reported to the borrower |
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| Total Cost of purchase using installment loan |
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| Payment Amount x # of payments x down payment |
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| Principle x % of down payment |
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| Total Amount of Monthly payment |
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| total time paid x amount paid each month |
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| Total amount paid with monthly installments |
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| down payment + total monthly payments |
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| actual coast of product - down payment |
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| Amount financed + Interest / time financed |
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| Alternate way to find Amount Financed |
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| 100% - % of down payment then take the answer of that which is the % of down payment and multiply it by the original principle |
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| Sometimes a lending institution may charge points to secure a loan. 1 point is.. |
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| 1% of the amount barrowed and is a one-time payment to the lending institution |
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| In order to obtain a mortgage from 125,000, the buyer must pay 2 points. Find the amount paid to the lending institution |
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(2 points means 2%)
2% x 125,000=2500 |
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| A person borrowed $150,000 at 7% for the purchase of a home. If his monthly payment is 997.50 on a 30-year mortgage, find the total amount of interest he will pay over the 30-year period |
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1) total amount that will be paid back over thirty years at 12 monthly payments
Total Amount=monthly payment x months per year x years =$359,100
Total Interest= Total Amt-money borrowed=209,100 |
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| Ron's detailing service borrowed $435 at 3.75% per year for 6 months to purchase new equipment. Find the interest and Maturity Value of the loan and monthly payment |
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Interest= $8.15
Maturity Value= Principle + interest |
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| Clark Cycle borrowed $2400 at 12.5% per year for 5 years to purchase new children's tricycles. Find the interest and maturity value of the loan |
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Interest = 1,500
Maturity Value= interest + Principle |
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| Mary purchased a refrigerator costing $470. She made a 20% down payment and paid $39 a month for 10 month. Find the total amount that she paid for the refrigerator |
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Down Payment= $94
Total of monthly payments= $390
Total Amt paid= down payment + total monthly payment = $484 |
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| Phil Martin purchased a large screen television set for 1560. He made a 15% down payment and paid the balance over 18 months. The store charged 8% interest on the amount financed. Find the Monthly payment. |
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Amt Financed= actual cost-down payment
Interest= Principle x rate x time
Monthly payment= Amt financed+ interest / # of months the balance was apaid
monthly payment = $82.51 |
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| If a home is sold for $ 89,000 and the bank requires 20% down payment find the amount to be financed. |
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| Amt financed= principle-down payment = 71,200 |
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| A person borrowed 150,000 at 7% for the purchase of a home. If his monthly payment is $997.50 on a 30-year mortgage, find the total amount of interest he will pay over the next 30 years. |
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Total Amt= Monthly payment x # of months in a year x # of years
Total Interest= total amount-principle=209,100 |
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| How to use the table of values located in Math packet.. |
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Monthly payment= (Amt of mortgage/1000) x table value
multiply by the value found in the table for the appropriate interest rate and the term of morgage. |
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| Find the monthly payment on a $60,000 mortgage at 8% for 20 years. |
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1) use table to look up value for 20 years at 8%
2) Monthly payment= (Amount of mortgage/$1,000) x table value
= $ 505.20 |
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| = annual rate / number of periods per year |
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| If $100 were left in a bank for 5 years in an account that paid 6% interest compounded quarterly, what would that $100 be worth at the end of 5 years? |
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rate per period= 6%/4 = 1.5%
How many periods in 5 years? -> if each period is one quarter there are 4 in one year. in 5 years there would be 20 periods.
Look up 1.5% and period 20 on interest table
Find --> maturity value of $1 is $1.3469
depostited 100 so 100 x 1.3469 = $134.69 |
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| $500 is deposited for 10 years. If the annual rate of interest is 3.5% and the interest is compounded annually, what is the maturity value of that $500 at the end of 10 years? |
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no rate per period because the interest is compounded annually.
maturity of $1 after 10 periods = $1.4106
multiply $1.4106 x 500 =$705.30 |
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| $5,000 is deposited for 5 years. The interest rate is 10% compounded semi annually. How much is the maturity value of the deposit after 5 years? |
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rate per period= annual rate / number of periods per year
10%/2=5% (10 periods)
$1.6289 x 5,000 = $8,144.50 |
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| $3,000 is deposited for eight years. Interest is compounded annually at a rate of 11%. How much is the maturity value of the deposit after 8 years? |
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11% (8 periods)
%2,3045 x 3,000= $6,913.50 |
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If you were to deposit $7,000 for 7 years and the bank paid 10% interest compounded quarterly, how much would the maturity value of your deposit be at the end of seven years?
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10%/4= 2.5% (28 periods)
$1,9965 x 7,000 = $13,975 |
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| the interest rate remains the same for the term of the mortgage |
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| the interest rate varies with the economy an prime lending rate of the banks |
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| Graduated payment mortgage |
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| the homebuyer makes smaller payments at the beginning of the term and larger payments at the end of term (Income of buyer may be expeced to rise in this case) |
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| To find Monthly payments on a mortgage |
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Monthly payment= Amt of mortgage/$1000 x Table value
use table 13-1 |
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| who buys a product from a manufacter having a well known distributor looks good increases sales takes the pressure off them doesn’t have to drive around more reliable to actual retailer. Also gets their name out there. |
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| a loan not backed up by any type of collateral that requires being paid back with money |
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| an authorization granted by a government or company to anindividual or group enabling them to carry out specified commercialactivities, e.g., providing a broadcasting service or acting as an agent for a company's products. |
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| the fees that a business pays a distributor to sell their product. The fee paid is usually a percent of the profit. |
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| Specific asset (such as land or building) pledged as a secondary (and subordinate) security by a borrower or guarantor. |
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| Loan extended only on the basis of the borrower's financial position, creditworthiness, credit history, and general reputation. The borrower signs a promissory not but does not pledgeany specific asset(s) as collateral. |
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| Arthur plans to sell ice cream bars at the football game next September. He plans to purchase 600 ice cream bars and sell them for $2 each. He estimates that 12% will melt or go unsold. What must he adjust his sells price to in order to make up for his expected losses? |
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1) number or product x price (600*2)
2) subtract 100% from 12 %
(.88*600)
3) divide total sells price by number expected to sell (1200/528) = $2.27 |
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| A party supply store bought 500 balloons to sell at 60 cents each. The owner knows that approx. 8% will break on inflation. Find the adjusted selling price if the store owner wishes to account for shrinkage. |
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1) 500*.60 =$300
2) 100-8= 92%
3) .92*500=460
4) 300/460 =.65 cents |
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found by subtracting the trade discount amount from the list price
List price - Trade discount amount |
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| The list price of a pressure washer is $340. A trade 30% discount is being offered. Find the amount of the discount and the net price. |
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Discount= 340*.30 =$102
Net Price= 100-30=70% (.70*340)
Net price =$238 |
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| This type of discount allows the buyer has 10 days after receiving the merchandise to pay the bill and take 2% discount. The invoice date in this case is ignored |
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| If the markup rate on the cost of an overhead projector is 48% and the markup is 115.20, what is the price of the projector? |
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Markup = rate * cost
Cost= markup/rate
Cost=115.20/.48 =240 |
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| If the Markup rate on a pair of shoes selling for $15 is 75%, calculate the cost of this pair of shoes to the store |
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