Single Payment Loan­Installment Loan.notebook
February 06, 2013
8.1 Single Payment Loans/Installment Loans
Single Payment Loan ‐ a loan that you repay with 1
payment after a specified amount of time
Promissory Note ‐ a written promise to pay a certain sum of
money on a specific date
Maturity Value ‐ the total amount you must repay
Term ‐ amount of time for which the loan is granted
Ordinary Interest ‐ based on a 360‐day year
Exact Interest ‐ based on a 365‐day year
Installment Loan ‐ a loan with equal payments over a
specified period of time
Down Payment ‐ a portion of the cash price of the item you
are purchasing before financing the rest
Amount Financed ‐ the portion of the cash price you owe
after the down payment
Interest = Principal X Rate X Time
Ordinary Interest = Principal X Rate X Time
360
Exact Interest = Principal X Rate X Time
365
Maturity Value = Principal + Interest
Amount Financed = Cash Price ‐ Down Payment
Down Payment = Cash Price X Percent
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Single Payment Loan­Installment Loan.notebook
February 06, 2013
Your bank granted a single‐payment loan of $7,200 for 91
days to pay for new merchandise for your candle shop.
Determine the maturity value of the loan if the rate is (a) 6%
ordinary interest or (b) 6% exact interest.
Step 1: Find the ordinary interest owed
Ordinary Interest = Principal X Rate X Time
360
Step 2: Find the maturity value with ordinary interest
Maturity Value = Principal + Interest
Step 3: Find the exact interest owed:
Ordinary Interest = Principal X Rate X Time
365
Step 4: Find the maturity value with exact interest
Maturity Value = Principal + Interest
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Single Payment Loan­Installment Loan.notebook
February 06, 2013
Find the (a) interest and (b) maturity value for each loan.
1) A new sound system costing $600 and financed at 9%
with ordinary interest for 90 days.
2) A tack room to a barn costing $4,850, financed at 7%
exact interest for 120 days.
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Single Payment Loan­Installment Loan.notebook
February 06, 2013
You decided to take out a single payment loan for $1,500 at
7.8% ordinary interest to pay your federal income tax bill. If the
loan's maturity value is $1,529.25, when would you have to pay
the loan back if you took it out on March 1st?
Step 1: Find the interest
Maturity Value = Principal + Interest
Step 2: Find the time of the loan in days
Ordinary Interest = Principal X Rate X t
360
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Single Payment Loan­Installment Loan.notebook
February 06, 2013
How long would it take a construction loan for $548,048 to earn
interest of $50,000 at 9% exact interest?
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Single Payment Loan­Installment Loan.notebook
February 06, 2013
You are buying gym equipment for $1,399. You make a $199
down payment and finance the rest. How much do you finance?
Find the amount financed:
Cash Price ‐ Down Payment
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Single Payment Loan­Installment Loan.notebook
February 06, 2013
You purchased season concert tickets for $1,999.99. The down
payment is $199.99. Find the amount financed.
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Single Payment Loan­Installment Loan.notebook
February 06, 2013
You purchased a previously owned piano for $1,140 using the
store's installment credit plan. You made a 20% down payment
and financed the rest. How much did you finance?
Step 1: Find the 20% down payment
Step 2: Find the amount financed
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Single Payment Loan­Installment Loan.notebook
February 06, 2013
Find the down payment and amount financed.
1) You purchased an antique chest for a $1,360 cash price. You
made a 20% down payment.
2) You bought a bracelet for $1,725. The down payment was
30%.
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Single Payment Loan­Installment Loan.notebook
February 06, 2013
Pg 307: 4‐12 even
Pg 309: 6‐20 even
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