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
promissory note
maturity value
single-payment
promissory
maturity
value
noteloan
The
A
loan
written
total
you
promise
amount
repay with
you
to pay
must
onea certain
repay
payment
sum
for
a of
loan.
money
after aonspecified
a specific
period
date
of the
in
time.
future.
Lesson Objective
Compute the maturity value and interest rate of a single-payment loan.
Content Vocabulary
term
ordinary interest
exact interest
term interest
ordinary
exact
interest
The amount
Interest
on a of
loan
time
calculated
for whichby
a
loan is granted.
basing
the loan’s time period on
a 365-day
360-day year.
Example 1
Anita Sloane’s bank granted her a singlepayment 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 singlepayment 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