Business Math
Lesson 8.1 Single Payment Loan
single-payment loan - a loan that you repay with one payment after a
specified period of time.
ex: promissory note - written for a specified amount to be paid on a
specific date in the future
maturity value - the total amount of the loan that you must repay
term: length of the loan
types of interest:
ordinary interest - calculated by basing the time of the
loan on 360 days
exact interest - calculated by basing the time of the
loan on 365 days.
interest = principal x rate x time
ordinary = principal x rate x time/360
exact = principal x rate x time/365
maturity value = principal + interest owed
Example 1 : Anita's bank granted her a single-payment loan of $7200
for 91 days at 1 2% ordinary interest. What is the maturity value of
the loan?
Example 2: Suppose her loan had been granted for 91 days at 1 2%
exact interest. What is the maturity value of the loan? What is the
difference between the two loans?
Homework: p. 285, # 3 - 1 6