Unit 6, Activity 1, Vocabulary Chart
During the unit on credit, maintain this vocabulary self-awareness chart. Before we begin this unit, rate
your understanding of each word with either a “+” (understand well), a “√” (limited understanding or
unsure), or a “—“ (don’t know). Over the course of this unit, return to this chart and revise any √ or –
marks to + marks as you learn new information. The goal is to replace all the check marks and minus
signs with a plus sign. When a + mark is made for a word, provide an example and a definition in your
own words. The completed chart is due when we complete the unit.
Word
+ or √
or -
Example
Definition
Credit card
Charge card
Debit card
Finance charge
Minimum payment
Credit limit
Annual fee
Annual percentage
rate
Monthly periodic
rate
Variable interest rate
Prime rate
Fair Credit
Reporting Act
Equal Credit
Opportunity Act
Truth in Lending Act
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 143
Unit 6, Activity 1, Credit Knowledge
Name___________________
Task:
1. Go to: http://www.practicalmoneyskills.com/english/index.php.
2. In the “At Home” tab, choose “Credit Cards” on the left under “Learning
Centers.”
3. Begin under the “Learn It” column.
a. Start with “Advantages and disadvantages”, click on the link and explore
the information provided.
b. Move down the links in the “Learn It” column. Explore all the links in the
column.
4. When complete, move on to the “Do It” column.
a. Here you will be taking four interactive quizzes:
i. Quiz 1: Quiz your knowledge (matching game)
ii. Quiz 2: About credit
iii. Quiz 3: Quiz your credit knowledge
iv. Quiz 4: Wise use of credit
b. Pause after each quiz, get my attention, and I will record your score for the
quiz.
Quiz 1
Quiz 2
Quiz 3
Quiz 4
5. After I have recorded your four quiz grades on this sheet, turn it in.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 144
Unit 6, Activity 2, Credit Card Statement
Account Number:
1111-2222-33334444
Credit Card Statement
Payment Due:
5/13/2008
Statement Date: 4/14/2008
Name: Boudreaux Dontired
Billing Period: 3/14/08 – 4/14/08
Credit Line:
$500.00
Reference
4833XF89
JJK98TRX
987PAY12
Previous Balance:
Purchases:
Cash Advances:
Payments:
Credits:
Finance Charge:
Late Charge:
NEW BALANCE
Credit Available:
$309.14
Sold
3/01
3/15
Posted
3/20
3/28
4/11
New Balance:
$190.86
Minimum Payment
Due: $20.00
Activity Since Last Statement
John’s BAR-B-Q
Baby’s Clothes Rack
Payment – Thank You
+169.38
+67.74
+
-50.00
+4.10
+
190.86
Current Amount Due:
Amount Past Due:
Amount Over Credit Limit:
190.86
Minimum Payment
Due:
20.00
Purchase:
Cash Advance
Periodic Rate:
2%
3%
Annual Percentage Rate:
24%
36%
Amount
14.83
52.91
-50.00
Customer Service, call: 1-800-###-####
For Lost or Stolen Credit Cards, call: 1-800-###-####
Task:
1. Go to:
http://www.practicalmoneyskills.com/english/resources/tutor/statements/credit_state.php
2. Pause at each topic on the right side of the screen, make note where each piece of
information is on the interactive account statement.
3. Label the Credit Card Statement above with the terms illustrated on the interactive
form. Ignore any missing sections on the above form.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 145
Unit 6, Activity 5, Credit Card Application
Task:
1.
2.
Fill-out each of the credit card applications, minus your social security number.
Read through the credit card agreement that should be attached to the application and, using the
chart below, make notes about the key points of the credit agreement.
Card 1
Key Point
Card 2
Card name:
Card name:
Cash Advance APR:
Cash Advance:
Balance Transfer APR:
Introductory:
Default APR:
Delinquency:
Annual percentage rate
(APR) for purchases,
list all
Other APRs, list all
Variable-rate
information
Grace period for
repayment of balance
for purchases
Method of computing
the balance for
purchases
Annual fee
Minimum finance
charge
Transaction fee for
balance transfers
Transaction fee for
cash advances
International
transactions
Late payment fee
Over-the-credit-limit
fee
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 146
Unit 6, Activity 8, Installment Loan with Tables
Task:
1. Use the formulas and table below to answer the questions.
2. For each problem, find the monthly payment, total amount repaid & total finance
charge.
3. Answer each question on your own paper, show all work.
Formulas:
Monthly Payment = (Amount of Loan / $100) X Monthly Payment on a $100 Simple
Interest Installment Loan (This is the
number from the table.)
Total Amount Repaid = Number of payments X Monthly Payment
Total Finance Charge = Total Amount Repaid - Amount of Loan
Monthly Payment on a $100 Simple Interest Installment Loan
Term
in
months
6
12
18
24
30
36
40
48
60
Annual Percentage Rate
8%
9%
17.06
8.70
5.91
4.52
3.69
3.13
2.86
2.44
2.03
17.11
8.75
5.96
4.57
3.73
3.18
2.90
2.49
2.08
10.5% 11.5%
17.18
8.81
6.03
4.64
3.80
3.25
2.97
2.56
2.15
17.23
8.86
6.08
4.68
3.85
3.30
3.02
2.61
2.20
12%
14% 15% 16% 17% 18% 24%
17.25
8.88
6.10
4.71
3.87
3.32
3.05
2.63
2.22
17.35
8.98
6.19
4.80
3.97
3.42
3.14
2.73
2.33
17.40
9.03
6.24
4.85
4.02
3.47
3.19
2.78
2.38
17.45
9.07
6.29
4.90
4.07
3.52
3.24
2.83
2.43
17.50
9.12
6.33
4.94
4.11
3.57
3.29
2.89
2.49
17.55
9.17
6.38
4.99
4.16
3.62
3.34
2.94
2.54
17.85
9.46
6.67
5.29
4.46
3.92
3.66
3.26
2.88
1. Installment loan of $2000. 12 monthly payments. APR is 18%.
2. Installment loan of $2000. 24 monthly payments. APR is 18%.
3. Installment loan of $2000. 24 monthly payments. APR is 11.5%.
4. Installment loan of $2000. 12 monthly payments. APR is 8%.
5. Installment loan of $10000. 24 monthly payments. APR is 18%.
6. Installment loan of $10000. 24 monthly payments. APR is 12%.
7. Installment loan of $10000. 24 monthly payments. APR is 8%.
8. Installment loan of $25000. 48 monthly payments. APR is 18%.
9. Installment loan of $25000. 48 monthly payments. APR is 8%.
10. Installment loan of $35000. 60 monthly payments. APR is 9%.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 147
Unit 6, Activity 8, Installment Loan with Tables with Answers
Problem
1. Installment loan of
$2000. 12 monthly
payments. APR is 18%.
2. Installment loan of
$2000. 24 monthly
payments. APR is 18%.
3. Installment loan of
$2000. 24 monthly
payments. APR is 11.5%.
4. Installment loan of
$2000. 12 monthly
payments. APR is 8%.
5. Installment loan of
$10000. 24 monthly
payments. APR is 18%.
6. Installment loan of
$10000. 24 monthly
payments. APR is 12%.
7. Installment loan of
$10000. 24 monthly
payments. APR is 8%.
8. Installment loan of
$25000. 48 monthly
payments. APR is 18%.
9. Installment loan of
$25000. 48 monthly
payments. APR is 8%.
10. Installment loan of
$35000. 60 monthly
payments. APR is 9%.
Monthly
Total Amount
Total Finance
Payment
Repaid
Charge
$183.36
$2,200.32
$200.32
$99.85
$2,396.40
$396.40
$93.68
$2,248.08
$248.08
$173.98
$2,087.76
$87.76
$499.24
$11,981.76
$1,981.76
$470.73
$11,297.52
$1,297.52
$452.27
$10,854.48
$854.48
$734.37
$35,249.76
$10,249.76
$610.32
$29,295.36
$4,295.36
$726.54
$43,592.40
$8,592.40
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 148
Unit 6, Activity 9, Repayment Simulation
Scenario: Imagine you purchase a CD player for your car at a local electronics store. The CD
player and installation totals $378.23. You open your first charge account to pay for the
purchase. Your account agreement requires you to pay a minimum of $20 each month until the
CD player is paid off. Your annual interest rate is 18%.
Problem: Create and complete a repayment schedule for your CD player loan. You make no
other charges or additional payments beyond the minimum to your account for the duration of
the payoff.
Solution: Include: (1) a repayment schedule, started below, (2) total months needed to payoff
the CD player, (3) total amount paid for the CD player, and (4) total interest paid. Note:
Calculate interest using the unpaid-balance method learned in unit 6.
Payment #
1
2
3
4
5
Repayment Schedule for CD player loan
Monthly
Amount for
Amount for
Payment
interest
principal
$20
$5.67
$14.33
$20
$5.46
$14.54
$20
$5.24
$14.76
$20
$5.02
$14.98
$20
$4.79
$15.21
New Principal
$363.90
$349.36
$334.60
$319.62
$304.41
Note: You may need to add to the table provided. If so, complete on back.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 149
Unit 6, Activity 9, Repayment Simulation with Answers
Solution table.
Payment #
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Repayment Schedule for CD player loan
Monthly
Amount for
Amount for
Payment
interest
principal
$20
$5.67
$14.33
$20
$5.46
$14.54
$20
$5.24
$14.76
$20
$5.02
$14.98
$20
$4.79
$15.21
$20
$4.57
$15.43
$20
$4.33
$15.67
$20
$4.10
$15.90
$20
$3.86
$16.14
$20
$3.62
$16.38
$20
$3.37
$16.63
$20
$3.12
$16.88
$20
$2.87
$17.13
$20
$2.61
$17.39
$20
$2.35
$17.65
$20
$2.09
$17.91
$20
$1.82
$18.18
$20
$1.55
$18.45
$20
$1.27
$18.73
$20
$.99
$19.01
$20
$.70
$19.30
$20
$.41
$19.59
$8.16
$.12
$8.04
New Principal
$363.90
$349.36
$334.60
$319.62
$304.41
$288.98
$273.31
$257.41
$541.27
$224.89
$208.26
$191.38
$174.25
$156.86
$139.21
$121.30
$103.12
$84.67
$65.94
$46.93
$27.63
$8.04
$0.00
Note: You may need to add to the table provided. If so, complete on back.
Total repaid: $448.16
Total interest: $69.93
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 150
Unit 6, Activity 10, Electronic Loan Calculation
Task
1.
2.
3.
4.
Work the problems below, find the monthly payment.
Use an Internet loan calculator at the link below.
Go to: http://www.bankrate.com/brm/popcalc2.asp
Print an amortization table for a problem of your choice.
1. Installment loan of $2000. 12 monthly payments. APR is 18%.
2. Installment loan of $2000. 24 monthly payments. APR is 18%.
3. Installment loan of $2000. 24 monthly payments. APR is 11.5%.
4. Installment loan of $2000. 12 monthly payments. APR is 8%.
5. Installment loan of $10000. 24 monthly payments. APR is 18%.
6. Installment loan of $10000. 24 monthly payments. APR is 12%.
7. Installment loan of $10000. 24 monthly payments. APR is 8%.
8. Installment loan of $25000. 48 monthly payments. APR is 18%.
9. Installment loan of $25000. 48 monthly payments. APR is 8%.
10. Installment loan of $35000. 60 monthly payments. APR is 9%.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 151
Unit 6, Activity 10, Electronic Loan Calculation with Answers
Refer to Installment Loan with Tables with Answers for monthly payment, total amount repaid, and total finance charge.
Amortization table for question #1.
Amortization Table for $2000.00 borrowed for 12 months at 18%
Payment
Number
1
2
3
4
5
6
7
8
Payment ($) 183.36
183.36
183.36
183.36
183.36
183.36
183.36 183.36 183.36 183.36 183.36 183.36
Principal
Paid ($)
153.36
155.66
158.00
160.37
162.77
165.21
167.69 170.21 172.76 175.35 177.98 180.65
Interest
Paid ($)
30.00
27.70
25.36
22.99
20.59
18.15
15.67
30.00
Total
Interest ($)
57.70
83.06
106.06
126.65
144.80
160.47 173.62 184.22 192.23 197.61 200.32
13.15
9
10.60
10
8.01
11
5.38
12
2.71
Balance ($) 1846.64 1690.98 1532.98 1372.62 1209.85 1044.64 876.95 706.74 533.98 358.63 180.65 0.00
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 152
Unit 6, Activity 12, Loan What-If
Names:
Task:
1. This is a group activity. Form into groups of 3 or 4.
2. Compare the loans from the table below. Take note of the differences and
similarities of the loans.
3. Use the following website:
http://www.quicken.com/banking_and_credit/loan_calc/ to calculate the loans.
4. Remember, amount financed = loan amount + fees financed
Loan Comparison Worksheet
Loan
Amount
Inputs
Interest
Term in
Rate
years
a.$10,000
b.$10,000
c.$10,000
d.$10,000
8.5%
12%
19.5%
7.5%
5
5
5
5
a.$29,050
b.$29,050
c.$29,050
d.$29,050
8.5%
8.5%
8.5%
8.5%
5
5
5
5
a.$3,000
b.$3,000
c.$3,000
6.5%
6.5%
6.5%
4
3.5
3
a.$19,175
b.$19,175
c.$19,175
4.5%
5.34%
3.9%
4
5
3
Fees
Financed
Scenario 1
$950
$950
$950
$950
Scenario 2
$0
$1,168
$450
$700
Scenario 3
$825
$825
$825
Scenario 4
$0
$0
$0
Amount
Financed
Outputs
Payment
Total
Interest
5. After the table is complete, turn the sheet over and rate the loans from each
scenario. Discuss the rationale for your choice with the group and summarize in
the box provided.
6. Be prepared to present your decisions to the class.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 153
Unit 6, Activity 12, Loan What-If
First Choice. Why?
Second Choice. Why?
Third Choice. Why?
Scenario
1
Scenario
2
Scenario
3
Scenario
4
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 154
Unit 6, Activity 12, Loan What-If with Answers
Loan
Amount
$10,000
$10,000
$10,000
$10,000
$29,050
$29,050
$29,050
$29,050
$3,000
$3,000
$3,000
$19,175
$19,175
$19,175
Loan Comparison Worksheet
Inputs
Interest
Term in
Fees
Amount
Rate
years
Financed
Financed
Scenario 1
8.5%
5
$950
$10,950
12%
5
$950
$10,950
19.5%
5
$950
$10,950
7.5%
5
$950
$10,950
Scenario 2
8.5%
5
$0
$29,050
8.5%
5
$1,168
$30,218
8.5%
5
$450
$29,500
8.5%
5
$700
$29,750
Scenario 3
6.5%
4
$825
$3,825
6.5%
3.5
$825
$3,825
6.5%
3
$825
$3,825
Scenario 4
4.5%
4
$0
$19,175
5.34%
5
$0
$19,175
3.9%
3
$0
$19,175
Outputs
Payment
Total
Interest
$224.66
$243.58
$287.07
$219.42
$2,529
$3,665
$6,274
$2,215
$596.01
$619.97
$605.24
$610.37
$6,710
$6,980
$6,814
$6,872
$90.71
$102.07
$117.23
$529
$462
$395
$437.26
$364.85
$565.27
$1,813
$2,716
$1,175
Each group’s reasons (pros/cons) should include items such as:
 If I finance the loan fees, my monthly payment is higher
 If I finance the loan fees, my total cost is higher
 If I make a down payment, my monthly payment is lower
 If I make a down payment, my total cost is lower
 If I decrease the term of the loan, my monthly payment is higher
 If I decrease the term of the loan, my total cost is lower
 If I obtain a lower rate, my monthly payment is lower
 If I obtain a lower rate, my total cost is lower
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 155
Unit 6, Activity 13, Discussion Guide
Your Credit Application
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 156
Unit 6, Activity 13, Discussion Guide
Your Credit Billing and Electronic Fund Transfer Statements
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 157
Unit 6, Activity 13, Discussion Guide
Your Debts and Debt Collectors
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 158
Unit 6, Activity 13, Discussion Guide
Solving Your Credit Problems
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 159
Unit 6, General Assessments, Use of Credit Rubric
Use of Credit Essay
Name: ________________________
Date Submitted: ____________
1
Organization
Sequence of
information is
difficult to follow.
Content
Knowledge
Student does not have
grasp of information;
student cannot
answer questions
about subject.
Work has four or
Grammar and more spelling errors
and/or grammatical
Spelling
errors.
Neatness
Work is illegible.
References
Work displays no
references.
Teacher:
Title of Work:
_
Criteria
2 __________________
3
Points
4
Information in
Reader has
Student presents
logical,
difficulty
information in
interesting
following work logical sequence
sequence which
because student which reader can
reader can
jumps around.
follow.
follow.
Student is
uncomfortable
Student
Student is at ease
with content and
demonstrates full
with content, but
is able to
knowledge (more
fails to elaborate.
demonstrate basic
than required).
concepts.
Presentation has
Presentation has
no more than two Presentation has
three misspellings
misspellings
no misspellings
and/or
and/or
or grammatical
grammatical
grammatical
errors.
errors.
errors.
Work has three or Work has one or
Work is neatly
four areas that are two areas that are
done.
sloppy.
sloppy.
Work does not
Work displays
have the
Reference section
the correct
appropriate
was completed
number of
number of
incorrectly
references,
required
written correctly.
references.
Total---->
____
____
____
____
____
____
Comments:
Teacher Comments:
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Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 160
Unit 6, General Assessments, Test
Name________________________________________________Date_______________
Jan and Fred Easton have been shopping for a boat and outboard motor for use on a
nearby lake during warm weather. They have shopped very carefully for the boat for several
months and believe that they have picked the right boat and motor combination and the right
dealer for their needs. The cash price they have bargained for the used boat they want is $6,000.
This price includes a used trailer.
The Eastons also shopped around carefully to find the best deal for borrowing the amount
of money they will need to buy the boat. They have identified three sources for the funds they
need: the boat dealer, their credit union, and a special low-interest rate credit card. The
information they have gathered about each loan is presented below. Answer the questions about
each loan offer.
I.
The boat dealer’s deal: The boat dealer, Water-Craft Sales, Inc., has offered the Eastons
these installment plan terms: 10% down payment and the remainder to be paid in 24 payments of
$261 each. Under this plan,
1. The amount financed is $______________________.
2. The installment price of the boat is $_______________________.
3. The total finance charge is $________________________.
4. The total installment plan price of the boat is _____________% greater than the cash
price.
5. Using the table below, the annual percentage rate for the dealer’s offer is ___________%.
Annual Percentage Rate
No. of
payments 14.00 14.25 14.50 14.75 15.00 15.25 15.50 15.75 16.00
(Finance Charge per $100 of Amount Financed)
6
4.12 4.20 4.27 4.35 4.42 4.49 4.57 4.64 4.72
12
7.74 7.89 8.03 8.17 8.31 8.45 8.59 8.74 8.88
18
11.45 11.66 11.87 12.08 12.29 12.50 12.72 12.93 13.14
20
12.70 12.93 13.17 13.41 13.64 13.88 14.11 14.35 14.59
24
15.23 15.51 15.80 16.08 16.37 16.65 16.94 17.22 17.51
30
19.10 19.45 19.81 20.17 20.54 20.90 21.26 21.62 21.99
36
23.04 23.48 23.92 24.35 24.80 25.24 25.68 26.12 26.57
17.00 18.00
5.02
9.45
13.99
15.54
18.66
23.45
28.35
5.32
10.02
14.85
16.49
19.82
24.92
30.15
II.
The Credit Union’s Deal: The Carlton Credit Union has offered the Eastons these terms:
A $6,000, two-year loan with interest on the unpaid balance at the monthly rate of 1.25%. They
are to make monthly payments of $250 on the principal along with interest for the month. The
Eastons must also sign a promissory note for the loan and pledge the boat, motor, and trailer as
collateral.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 161
Unit 6, General Assessments, Test
6. Complete the monthly payment schedule below.
Payment
Number
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Carlton Credit Union
Repayment Schedule for
Janice and Fred Easton
Unpaid
Payment on
Monthly
Balance
Principal
Interest
$6,000
250
$75.00
5,750
250
71.88
5,500
250
68.75
250
65.63
250
62.50
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
$6,000
Totals
Total Payment
$350.00
321.88
318.75
315.63
312.50
309.38
306.25
Under this plan,
7. The total price of the boat is $___________________________.
8. The total finance charges are $__________________________.
9. The total installment plan price of the boat is _____________% greater, to the nearest
tenth of a percent, than the cash price.
10. The annual rate of interest charged is _____________________%.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 162
Unit 6, General Assessments, Test
III.
The Credit Card Option: The Eastons have just received a new credit card offer. They can
charge up to $7,500 on any purchases. The card offers a 7% annual percentage rate until April
30, 20__. After that, an 18% annual percentage rate will be charged. Finance charges are based
on the previous balance. If they buy the boat using the credit card, no down payment is required.
The Eastons would not make any other purchases with the card until the boat and motor were
paid off. Because Mrs. Easton receives quarterly checks from a devoted aunt, the Eastons know
they can make the principal payments shown in the chart below. The first payment is due on
April 7.
11. Complete the following chart showing the monthly finance charge, total payment, and
new balance.
Date
March 7
April 7
May 7
June 7
July 7
Aug 7
Sept 7
Oct 7
Nov 7
Dec 7
Jan 7
Feb 7
Mar 7
Apr 7
Total
7% Annual
Percentage
Rate
$0
29.46
27.97
Planned
Principal
Payment
$950
255
255
255
950
255
255
255
950
255
255
255
Total Payment
Ending Balance
$950.00
284.46
282.97
$6,000
5,050
4,795
4,540
$0
$6,000
Under this plan,
12. The total credit card price of the boat is $_________________________.
13. The total finance charges are $___________________________.
14. The total credit card price is _______________% greater, to the nearest tenth of a
percent, than the cash price.
15. Considering the Easton’s situation, which credit choice would you advise them to make?
Why?
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 163
Unit 6, General Assessments, Test with Answers
Name________________________________________________Date_______________
Jan and Fred Easton have been shopping for a boat and outboard motor for use on a
nearby lake during warm weather. They have shopped very carefully for the boat for several
months and believe that they have picked the right boat and motor combination and the right
dealer for their needs. The cash price they have bargained for the used boat they want is $6,000.
This price includes a used trailer.
The Eastons also shopped around carefully to find the best deal for borrowing the amount
of money they will need to buy the boat. They have identified three sources for the funds they
need: the boat dealer, their credit union, and a special low-interest rate credit card. The
information they have gathered about each loan is presented below. Answer the questions about
each loan offer.
I.
The boat dealer’s deal: The boat dealer, Water-Craft Sales, Inc., has offered the Eastons
these installment plan terms: 10% down payment and the remainder to be paid in 24 payments of
$261 each. Under this plan,
16. The amount financed is $________5,400________
17. The installment price of the boat is $__________6,264_________
18. The total finance charge is $_________864____________
19. The total installment plan price of the boat is _____14.4_____% greater than the cash
price.
20. Using the table below, the annual percentage rate for the dealer’s offer is ___14.75___%.
Annual Percentage Rate
No. of
payments 14.00 14.25 14.50 14.75 15.00 15.25 15.50 15.75 16.00
(Finance Charge per $100 of Amount Financed)
6
4.12 4.20 4.27 4.35 4.42 4.49 4.57 4.64 4.72
12
7.74 7.89 8.03 8.17 8.31 8.45 8.59 8.74 8.88
18
11.45 11.66 11.87 12.08 12.29 12.50 12.72 12.93 13.14
20
12.70 12.93 13.17 13.41 13.64 13.88 14.11 14.35 14.59
24
15.23 15.51 15.80 16.08 16.37 16.65 16.94 17.22 17.51
30
19.10 19.45 19.81 20.17 20.54 20.90 21.26 21.62 21.99
36
23.04 23.48 23.92 24.35 24.80 25.24 25.68 26.12 26.57
17.00 18.00
5.02
9.45
13.99
15.54
18.66
23.45
28.35
5.32
10.02
14.85
16.49
19.82
24.92
30.15
II.
The Credit Union’s Deal: The Carlton Credit Union has offered the Eastons these terms:
A $6,000, two-year loan with interest on the unpaid balance at the monthly rate of 1.25%. They
are to make monthly payments of $250 on the principal along with interest for the month. The
Eastons must also sign a promissory note for the loan and pledge the boat, motor, and trailer as
collateral.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 164
Unit 6, General Assessments, Test with Answers
21. Complete the monthly payment schedule below.
Payment
Number
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Carlton Credit Union
Repayment Schedule for
Janice and Fred Easton
Unpaid
Payment on
Monthly
Balance
Principal
Interest
$6,000
250
$75.00
5,750
250
71.88
5,500
250
68.75
5,250
250
65.63
5,000
250
62.50
4,750
250
59.38
4,500
250
56.25
4,250
250
53.13
4,000
250
50.00
3,750
250
46.88
3,500
250
43.75
3,250
250
40.63
3,000
250
37.50
2,750
250
34.38
2,500
250
31.25
2,250
250
28.13
2,000
250
25.00
1,750
250
21.88
1,500
250
18.75
1,250
250
15.63
1,000
250
12.50
750
250
9.38
500
250
6.25
250
250
3.13
$6,000
937.56
Totals
Total Payment
$350.00
321.88
318.75
315.63
312.50
309.38
306.25
303.13
300.00
296.88
293.75
290.63
287.50
284.38
281.25
278.13
275.00
271.88
268.75
265.63
262.50
259.38
256.25
253.13
6,937.56
Under this plan,
22. The total price of the boat is $__________6,937.56___________
23. The total finance charges are $____________937.56__________
24. The total installment plan price of the boat is ____15.6______% greater, to the nearest
tenth of a percent, than the cash price.
25. The annual rate of interest charged is _________15__________%.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 165
Unit 6, General Assessments, Test with Answers
III.
The Credit Card Option: The Eastons have just received a new credit card offer. They can
charge up to $7,500 on any purchases. The card offers a 7% annual percentage rate until April
30, 20__. After that, an 18% annual percentage rate will be charged. Finance charges are based
on the previous balance. If they buy the boat using the credit card, no down payment is required.
The Eastons would not make any other purchases with the card until the boat and motor were
paid off. Because Mrs. Easton receives quarterly checks from a devoted aunt, the Eastons know
they can make the principal payments shown in the chart below. The first payment is due on
April 7.
26. Complete the following chart showing the monthly finance charge, total payment, and
new balance.
Date
March 7
April 7
May 7
June 7
July 7
Aug 7
Sept 7
Oct 7
Nov 7
Dec 7
Jan 7
Feb 7
Mar 7
Apr 7
Total
7% Annual
Percentage
Rate
$0
29.46
27.97
26.48
25.00
19.45
17.97
16.48
14.99
9.45
7.96
6.48
4.99
206.68
Planned
Principal
Payment
$950
255
255
255
950
255
255
255
950
255
255
255
855
$6,000
Total Payment
$950.00
284.46
282.97
281.48
975.00
274.45
272.97
271.48
964.99
264.45
262.96
261.48
859.99
6,206.68
Ending Balance
$6,000
5,050
4,795
4,540
4,285
3,335
3,080
2,825
2,570
1,620
1,365
1,110
855
$0
Under this plan,
27. The total credit card price of the boat is $________6,206.68________
28. The total finance charges are $_________206.68_____________
29. The total credit card price is _______3.4_____% greater, to the nearest tenth of a percent,
than the cash price.
30. Considering the Easton’s situation, which credit choice would you advise them to make?
Why?
Answers will vary. The Credit Card option is cheapest, followed by the dealer’s offer, and the
Credit Union’s offer is the most expensive.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 166
Unit 6, Specific Assessments, Activity 3, Average Daily Balance
Many companies calculate the finance charge using the average-daily-balance method.
The average daily balance is the average of the account balance at the end of each day of
the billing period. New purchases posted during the billing period should be added as of
the posting date. Payments received during the billing period should be subtracted as of
the posting date. The finance charge is calculated by multiplying the periodic rate by the
average daily balance.
1.
Sum of
Billing
End-of-day
Number of
Purchase
Payment
Daily
Periods
Balance
Days
Balances
4/01 – 4/10
$410.20
4/11
$150.00
4/12 – 4/20
4/21
$43.12
4/22 – 4/30
Totals
What is the average-daily-balance? ________________________________
If the annual interest rate is 18%, what is the finance charge? ____________________
2. Calculate the average daily balance, finance charge, and new balance as of July 1 using
the average-daily-balance method. The periodic rate is 1.45%.
Date
June 1
June 11
June 25
Transaction
Balance
Payment
Purchase
Amount
$800.00
$200.00
$150.00
3. A portion of an account statement for September is shown. The finance charge is
computed using the average-daily-balance method. Find the average daily balance, the
finance charge, and the new balance.
Reference
4833XF89
JJK98TRX
987PAY12
0007619A
Sold
9/10
9/15
Previous Balance:
169.38
Billing Period:
Periodic Rate:
1.977%
Average Daily Balance:
Finance Charge:
9/23
Posted
9/20
9/26
9/28
9/29
Description
Corner Drug
Swap Shoppe
Payment – Thank You
Babbit’s Plumbing Supply
Amount
19.86
96.72
-50.00
19.43
9/01 – 9/30
New Balance:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 167
Unit 6, Specific Assessments, Activity 3, Average Daily Balance
4. Calculate the average daily balance and the finance charge for the statement below.
Account Number:
1111-2222-33334444
Credit Card Statement
Payment Due:
5/13/2008
Statement Date: 4/13/2008
Name: Boudreaux Dontired
Billing Period: 3/14/08 – 4/13/08
Credit Line:
$500.00
Credit Available:
$309.14
Reference
4833XF89
JJK98TRX
987PAY12
Sold
3/01
3/15
Previous Balance:
Purchases:
Cash Advances:
Payments:
Credits:
Finance Charge:
Late Charge:
NEW BALANCE
+169.38
+67.74
+
-50.00
+
+
Annual Percentage Rate:
Posted
3/20
3/28
4/11
New Balance:
$190.86
Minimum Payment Due:
$20.00
Activity Since Last Statement
John’s BAR-B-Q
Baby’s Clothes Rack
Payment – Thank You
Amount
14.83
52.91
-50.00
Current Amount Due:
Amount Past Due:
Amount Over Credit Limit:
Purchase:
Cash Advance:
Customer Service, call: 1-800-###-####
24%
36%
For Lost or Stolen Credit Cards, call: 1-800-###-####
Average Daily Balance:_____________________________
Finance Charge: ___________________________________
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 168
Unit 6, Specific Assessments, Activity 3, Average Daily Balance with Answers
1.
Billing
Periods
4/01 – 4/10
4/11
4/12 – 4/20
4/21
4/22 – 4/30
Purchase
Payment
$150.00
$43.12
End-of-day
Balance
Number of
Days
$410.20
$260.20
$260.20
$303.32
$303.32
10
1
9
1
9
30
Totals
Sum of
Daily
Balances
$4,102.00
$260.20
$2,341.80
$303.32
$2,729.88
$9,737.20
What is the average-daily-balance? ______________$324.57__________
If the annual interest rate is 18%, what is the finance charge? _______ $4.87_____
2. Calculate the average daily balance, finance charge, and new balance as of July 1 using the
average-daily-balance method. The periodic rate is 1.45%.
Date
June 1
June 11
June 25
Transaction
Balance
Payment
Purchase
Amount
$800.00
$200.00
$150.00
Average Daily Balance: $698.39
Finance Charge: $10.13
New Balance: $760.13
3. A portion of an account statement for September is shown. The finance charge is computed
using the average-daily-balance method. Find the average daily balance, the finance charge, and
the new balance.
Reference
4833XF89
JJK98TRX
987PAY12
0007619A
Sold
9/10
9/15
Previous Balance:
169.38
Billing Period:
9/01 – 9/30
Periodic Rate:
1.977%
Average Daily Balance:
$189.08
Finance Charge:
$3.74
New Balance:
$259.13
9/23
Posted
9/20
9/26
9/28
9/29
Description
Corner Drug
Swap Shoppe
Payment – Thank You
Babbit’s Plumbing Supply
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Amount
19.86
96.72
-50.00
19.43
Page 169
Unit 6, Specific Assessments, Activity 3, Average Daily Balance with Answers
4. Calculate the average daily balance and the finance charge for the statement below.
Account Number:
Credit Card Statement
1111-2222-3333-4444
Payment Due:
5/13/2008
Statement Date: 4/13/2008
Name: Boudreaux Dontired
Billing Period: 3/14/08 – 4/13/08
Credit Line:
$500.00
Credit Available:
$308.77
Reference
4833XF89
JJK98TRX
987PAY12
Sold
3/01
3/15
Previous Balance:
Purchases:
Cash Advances:
Payments:
Credits:
Finance Charge:
Late Charge:
NEW BALANCE
+169.38
+67.74
+
-50.00
+
+
Annual Percentage Rate:
Posted
3/20
3/28
4/11
New Balance:
$191.23
Minimum Payment Due:
$20.00
Activity Since Last Statement
John’s BAR-B-Q
Baby’s Clothes Rack
Payment – Thank You
Amount
14.83
52.91
-50.00
Current Amount Due:
Amount Past Due:
Amount Over Credit Limit:
Purchase:
Cash Advance:
Customer Service, call: 1-800-###-####
24%
36%
For Lost or Stolen Credit Cards, call: 1-800-###-####
Average Daily Balance:_______________$205.52________
Finance Charge: ______________$4.11_________________
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 170
Unit 6, Specific Assessments, Activity 9, Repayment Schedule Rubric
Repayment Schedule Rubric
CATEGORY
Table
2
1
0
All 23 months of table are
complete
Between 15 & 22 months of
table complete
Less than 15 months
complete
Calculations, months All table calculations are
correct
5 through 22
Many calculations are correct Few calculations are correct
Month 23
Monthly Payment, Amount
One or two items incorrect,
for Interest, and Principal are but not all.
correct
All items incorrect
Total Amount Paid &
Total Interest Paid
Both correct
Neither correct
One correct
Above rubric adopted from: http://rubistar.4teachers.org/
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 171
Unit 6, Specific Assessments, Activity 11, House Savings
Directions: Using the skills you have learned using a graphing calculator, answer the
following question. Your answer should list the key strokes required to solve the problem
and a written summary of the output screen.
You buy a house and finance $121,000 for 30 years at an interest rate of 7.2%. You are told that
your payments would be $821.33 for the next 360 months. You find out that you have $25 extra
each month that you can put on you house payment. If you pay an extra $25 a month, how long
would it take you to pay off the house and how much interest would you save?
Key strokes:
Input screen:
Output screen:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 172
Unit 6, Specific Assessments, Activity 11, House Savings with Answers
Key strokes:
Press APPS, highlight 1, press ENTER, highlight 1, press ENTER
Input screen:
Enter 0 (N=) press ENTER
Enter 7.2 (I%=) press ENTER
Enter 121000 (PV=) press ENTER
Enter –846.33-25 (PMT=) press ENTER
Enter 0 (FV=) press ENTER
Enter 12 (P/Y=) press ENTER
Highlight the 0 after N= press 2nd SOLVE
Clear home screen
Enter 360 * 821.33 – 846.33 * 326.09 press ENTER
(NOTE: This is the money you would save if you paid $25 extra per month.)
Output screen:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 173
Unit 6, Specific Assessments, Activity 13, Reciprocal Teaching Rubric
Reciprocal Teaching Rubric
CATEGORY
(25 - 22)
High quality
(21-19)
Above Average
(18-14)
Average
(13-8)
Below Average
Focus on the
task
Consistently stays
focused on the task
and what needs to be
done. Very selfdirected.
Focuses on the task
and what needs to be
done most of the
time. Other group
members can count
on this person.
Focuses on the task
and what needs to be
done some of the
time. Other group
members must
sometimes nag, prod,
and remind to keep
this person on-task.
Rarely focuses on the
task and what needs
to be done. Lets
others do the work.
Provides high quality
work.
Provides work that
occasionally needs to
be checked/redone by
other group members
to ensure quality.
Provides work that
usually needs to be
checked/redone by
others to ensure
quality.
Quality of Work Provides work of the
highest quality.
Focus on the
task
Consistently stays
focused on the task
and what needs to be
done. Very selfdirected.
Focuses on the task
and what needs to be
done most of the
time. Other group
members can count
on this person.
Focuses on the task
and what needs to be
done some of the
time. Other group
members must
sometimes nag, prod,
and remind to keep
this person on-task.
Rarely focuses on the
task and what needs
to be done. Lets
others do the work.
Timemanagement
Routinely uses time
well throughout the
project to ensure
things get done on
time. Group does not
have to adjust
deadlines or work
responsibilities
because of this
person's
procrastination.
Usually uses time well
throughout the
project, but may have
procrastinated on one
thing. Group does not
have to adjust
deadlines or work
responsibilities
because of this
person's
procrastination.
Tends to
procrastinate, but
always gets things
done by the
deadlines. Group
does not have to
adjust deadlines or
work responsibilities
because of this
person's
procrastination.
Rarely gets things
done by the deadlines
AND group has to
adjust deadlines or
work responsibilities
because of this
person's inadequate
time management.
Rubric generated at: http://rubistar.4teachers.org/
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 174
Unit 7, Activity 2, Dealer’s Cost Worksheet
Name:______________________________
Directions: For each problem given, complete a Dealer’s Cost Worksheet.
1. List the MSRP of the:
a. auto base price
b. all options individually
2. Record the dealer’s cost percentage given in the problem onto the worksheet.
3. Calculate the dealer’s cost of each item listed.
4. Calculate the total dealer’s cost, dealer’s profit in dollars and as a percentage.
Vehicle / Options
Dealer’s Cost Worksheet
Dealer’s Cost
MSRP
Percentage
Dealer’s Cost
Total Dealer’s Cost
Dealer’s Profit if all Options Are Purchased
Percentage of Dealer Profit
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 175
Unit 7, Activity 2, Dealer’s Cost Worksheet
Vehicle / Options
Dealer’s Cost Worksheet
Dealer’s Cost
MSRP
Percentage
Dealer’s Cost
Total Dealer’s Cost
Dealer’s Profit If All Options Are Purchased
Percentage of Dealer Profit
Vehicle / Options
Dealer’s Cost Worksheet
Dealer’s Cost
MSRP
Percentage
Dealer’s Cost
Total Dealer’s Cost
Dealer’s Profit If All Options Are Purchased
Percentage of Dealer Profit
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 176
Unit 7, Activity 3, Rebate Worksheet
Name_____________
Task:
1. Use the monthly payment table below to complete each Automobile Rebate Worksheet.
Monthly Payment on a $100 Simple Interest Installment Loan
Term
in
months
6
12
18
24
30
36
40
48
60
Annual Percentage Rate
8%
9%
17.06
8.70
5.91
4.52
3.69
3.13
2.86
2.44
2.03
17.11
8.75
5.96
4.57
3.73
3.18
2.90
2.49
2.08
Vehicle / Options
Base price
Alarm system
Larger wheels &
tires
Accent stripes
Leather seats
Extended warranty
Destination charge
TOTAL MSRP:
Rebate: 2,000
APR: 10.5%
10.5% 11.5%
17.18
8.81
6.03
4.64
3.80
3.25
2.97
2.56
2.15
17.23
8.86
6.08
4.68
3.85
3.30
3.02
2.61
2.20
12%
14% 15% 16% 17% 18% 24%
17.25
8.88
6.10
4.71
3.87
3.32
3.05
2.63
2.22
17.35
8.98
6.19
4.80
3.97
3.42
3.14
2.73
2.33
17.40
9.03
6.24
4.85
4.02
3.47
3.19
2.78
2.38
17.45
9.07
6.29
4.90
4.07
3.52
3.24
2.83
2.43
Automobile Rebate Worksheet #1
MSRP
Cost without rebate
$21,060
Monthly Payment:
$500
$945
$170
$895
$615
$465
$24,650
17.50
9.12
6.33
4.94
4.11
3.57
3.29
2.89
2.49
17.55
9.17
6.38
4.99
4.16
3.62
3.34
2.94
2.54
17.85
9.46
6.67
5.29
4.46
3.92
3.66
3.26
2.88
Cost with rebate
Monthly Payment:
Total Amount
Repaid:
Total Amount
Repaid:
Total Finance
Charge:
Total Finance
Charge:
Term: 48 months
Total cost of car without rebate:
Total cost of car with rebate:
Actual savings with rebate applied:
Percentage of savings with rebate applied:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 177
Unit 7, Activity 3, Rebate Worksheet
Vehicle / Options
Base price
Alarm system
Larger wheels &
tires
Accent stripes
Leather seats
Extended warranty
Destination charge
TOTAL MSRP:
Rebate: 1,500
APR: 17%
Automobile Rebate Worksheet #2
MSRP
Cost without rebate
$16,995
Monthly Payment:
$150
$850
$478
$18,473
Cost with rebate
Monthly Payment:
Total Amount
Repaid:
Total Amount
Repaid:
Total Finance
Charge:
Total Finance
Charge:
Term: 60 months
Total cost of car without rebate:
Total cost of car with rebate:
Actual savings with rebate applied:
Percentage of savings with rebate applied:
Vehicle / Options
Base price
Alarm system
Larger wheels &
tires
Accent stripes
Leather seats
Extended warranty
Destination charge
TOTAL MSRP:
Rebate: 4,000
APR: 8%
Automobile Rebate Worksheet #3
MSRP
Cost without rebate
$39,445
Monthly Payment:
$200
$1,100
$1,300
Not offered
$760
$42,805
Cost with rebate
Monthly Payment:
Total Amount
Repaid:
Total Amount
Repaid:
Total Finance
Charge:
Total Finance
Charge:
Term: 60 months
Total cost of car without rebate:
Total cost of car with rebate:
Actual savings with rebate applied:
Percentage of savings with rebate applied:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 178
Unit 7, Activity 3, Rebate Worksheet with Answers
Unit 8, Activity 3
Solutions.
Automobile Rebate Worksheet #1
Cost without rebate
Cost with rebate
Monthly
Payment:
Monthly
Payment:
$631.04
Total Amount
Repaid:
$30,289.92
Total Finance
Charge:
$5,639.92
$579.84
Total Amount
Repaid:
$27,832.32
Total Finance
Charge:
$5,182.32
Total cost of car without rebate:
$30,289.92
Total cost of car with rebate:
$27,832.32
Actual savings with rebate applied:
$2,457.60
Percentage of savings with rebate
applied:
8.1%
Automobile Rebate Worksheet #2
Cost without rebate
Cost with rebate
Monthly
Payment:
Monthly
Payment:
$459.98
Total Amount
Repaid:
$27,598.80
Total Finance
Charge:
$9,125.80
$422.63
Total Amount
Repaid:
$25,357.80
Total Finance
Charge:
$8,384.80
Total cost of car without rebate:
$27,598.80
Total cost of car with rebate:
$25,357.80
Actual savings with rebate applied:
$2,241.00
Percentage of savings with rebate
applied:
8.1%
Automobile Rebate Worksheet #3
Cost without rebate
Cost with rebate
Monthly
Payment:
Monthly
Payment:
$868.94
Total Amount
Repaid:
$52,136.40
Total Finance
Charge:
$9,331.40
$787.74
Total Amount
Repaid:
$47,264.40
Total Finance
Charge:
$8,459.40
Total cost of car without rebate:
$52,136.40
Total cost of car with rebate:
$47,264.40
Actual savings with rebate applied:
$4,872.00
Percentage of savings with rebate
applied:
9.3%
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 179
Unit 7, Activity 4, Used Auto Worksheet
Name:_______________________
National Automobile Dealer’s Association publishes a book that contains prices for used
automobiles. The book has prices for two different categories for each vehicle: Average
Retail Price and Average Trade-In Price. We will use the NADA website to complete this
activity.
http://www.nadaguides.com/default.aspx
Choose: Used Car Prices
Task:
Use a family vehicle with the actual mileage, condition and options of the vehicle.
Complete the worksheet below for your vehicle.
Used Vehicle Pricing Worksheet
Vehicle
Mileage:
Clean Trade-In
Clean Retail Value
Options (List options present on vehicle.)
Total Price:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 180
Unit 7, Activity 7, Spreadsheet Depreciation
Task:
1. Create a spreadsheet, using Microsoft Excel®, to calculate the annual
depreciation of the automobile in the problem below. The spreadsheet should
calculate the amount of depreciation and the resale value. Model your spreadsheet
on the example below.
2. Create a chart of data and a graph of the year of ownership and the resale value.
3. Save your chart and graph on a disk using your name as the file name. Print the
graph.
4. Use the graph to predict in what year of ownership the vehicle will be worth
approximately $10,000.
Problem.
A new car bought for $38,240 is estimated to depreciate by the following percentages of
the original cost during the first 10 years: 26, 21, 14, 10, 8, 7, 6, 5, 4, 3. How can these
percents be used to form a spreadsheet and a graph to represent the resale value?
Year
Example chart.
Percent of
Depreciation
0
1
2
3
4
5
6
7
8
9
10
Amount of
Depreciation
25%
20%
12%
10%
8%
7%
6%
5%
4%
3%
Resale Value
$52,920
$28,680
$22,944
$20,191
$18,172
$16,718
$15,548
$14,615
$13,884
$13,329
$12,929
$9,560
$5,736
$2,753
$2,019
$1,454
$1,170
$933
$731
$555
$400
Depreciation
Example graph.
$60,000.00
Value in Dollars
$50,000.00
$40,000.00
$30,000.00
$20,000.00
$10,000.00
$0.00
1
2
3
4
5
6
7
8
9
10
11
Year of Ownership
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 181
Unit 7, Activity 7, Spreadsheet Depreciation with Answers
Year of
Ownership
Percent of Depreciation
0
1
2
3
4
5
6
7
8
9
10
Amount of Depreciation
Resale Value
$9,942.40
$5,942.50
$3,129.71
$1,922.54
$1,384.23
$1,114.30
$888.26
$695.80
$528.81
$380.74
$38,240.00
$28,297.60
$22,355.10
$19,225.39
$17,302.85
$15,918.62
$14,804.32
$13,916.06
$13,220.26
$12,691.45
$12,310.70
26%
21%
14%
10%
8%
7%
6%
5%
4%
3%
Depreciation
Value in Dollars
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
1
2
3
4
5
6
7
8
9
10
11
Year of Ownership
Estimated year when $10,000 value is reached: 12-13
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 182
Unit 7, Activity 7, Depreciation Story Chain
Task:
1. This is a group activity, arrange into groups of three.
2. Each group will create an automobile depreciation problem similar to the one
used in part one of this activity. However, the problem you create must be a linear
depreciation problem. We discussed linear depreciation in activity 6.
3. In this story chain one member will begin writing a linear depreciation problem,
the second member will add information and the third will complete the problem,
as in this example.
Linear Depreciation Example
Student 1: Buddy’s new car cost $45,603. He expects to keep the car 10 years.
Student 2: He estimates the car will depreciate linearly by 9.5% of the original cost
during each of the first 10 years.
Student 3: Make both a table and a graph showing the resale value of the car over the ten
years Buddy expects to keep it.
4. When the group’s problem is complete, bring it to me to read and approve.
5. Produce a spreadsheet for the linear depreciation problem you created using
Microsoft Excel® with graph.
6. Print the graph.
7. Turn-in your problem and graph.
Linear Depreciation Problem
Student 1:
Student 2:
Student 3:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 183
Unit 7, Activity 9, Buying/Leasing Opinionnaire
Name:_____________________________________
Directions: Read each statement carefully and decide whether you agree or disagree with
it, placing a check mark in the appropriate Before column.
When we have finished with the presentation, decide whether your anticipations need to
be changed by placing a check mark in the appropriate After column.
Before
After
Agree
Disagree
Agree
Disagree
1. Leasing is a great way to get
into my first car.
2. “Up-front” costs for leasing
are less than for buying.
3. I should lease only if I plan to
keep the vehicle a long time.
4. Monthly payments are less if
I lease the vehicle.
5. If I drive a lot, I’m better off
just buying the vehicle in the
beginning.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 184
Unit 7, Activity 9, Buying Vs Leasing Notes
Task:
1. There are key differences in buying and leasing an automobile.
2. Use this page to take notes as I cover the PowerPoint® “Keys To Leasing”.
Difference
Buying vs. Leasing an Automobile
Buying
Leasing
Ownership
Up-front costs
Monthly payments
Early termination
Vehicle return
Future value
Mileage
Excessive wear
End of term
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 185
Unit 7, Activity 9, Buying Vs Leasing Notes with Answers
Difference
Ownership
Up-front costs
Monthly payments
Early termination
Vehicle return
Future value
Mileage
Excessive wear
End of term
Buying vs. Leasing an Automobile
Buying
Leasing
You own the vehicle and get to
You do not own the vehicle,
keep it at the end of the financing and must return it at the end of
term.
the lease, or buy it.
Include down payment, taxes,
Include first months payment,
registration & other fees.
security deposit, down
payment, taxes, registration
and other fees.
Loan payments are usually
Lease payments are usually
higher because you are paying
lower because you are paying
for the entire price of the vehicle only for the vehicle’s
during the term of the loan.
depreciation during the lease
term.
Can be terminated early by
Often penalties are assessed
paying-off the loan early or by
for early lease termination.
trading-in the vehicle for another
vehicle.
N/A
Vehicle must be maintained in
accordance with
manufacturers requirement.
Vehicle may not have
modifications such as new
wheels and tires or aftermarket
stereo.
Market determined
Often determined as an
educated guess at the time of
lease; this is called residual
value.
Unlimited; no restrictions
Leases commonly set mileage
limits and empose penalties for
excess mileage at time of lease
termination.
No restrictions
Vehicle must be maintained in
accordance with
manufacturers requirements.
There are penalties for
excessive wear and/or vehicle
damage of any form.
You own the vehicle.
You do not own the vehicle.
Often you may purchase a
leased vehicle at the end of the
lease contract for the
predetermined residual value.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 186
Unit 7, Activity 10, Rental Cost Worksheet
Rental Cost Worksheet
Size of vehicle:
Daily rate:
$
Weekly rate:
$
Mileage charge:
$
Insurance fees:
$
Days rented:
Weeks rented:
Miles driven:
Total rental fee:
$
Total mileage
charge:
$
Gasoline cost per
gallon:
$
Total gasoline
cost:
$
Total cost of renting the vehicle: Add: insurance fees, total rental fee, total mileage charge & total
gasoline
cost.
Total cost of renting the
vehicle:
$
Rental Cost Worksheet
Size of vehicle:
Daily rate:
$
Weekly rate:
$
Mileage charge:
$
Insurance fees:
$
Days rented:
Weeks rented:
Miles driven:
Total rental fee:
$
Total mileage
charge:
$
Gasoline cost per
gallon:
$
Total gasoline
cost:
$
Total cost of renting the vehicle: Add: insurance fees, total rental fee, total mileage charge & total
gasoline
cost.
Total cost of renting the
vehicle:
$
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 187
Unit 7, Activity 11, Louisiana Liability Minimum
Task:
Organize your interview notes (3x5 cards) into a series of small, 8 ½” by 11” posterlike illustrations to represent the questions and answers from the interview. This series
of small posters would resemble a PowerPoint presentation, but is done by hand. You
may include any pamphlets that the agent may have given you.
FYI
Fifty-four percent of motor vehicle crash deaths among teenagers in 2005 occurred on Friday, Saturday, or
Sunday.
Half of teenage motor vehicle crash deaths in 2005 occurred between 3pm and midnight.
Source: Insurance Institute for Highway Safety
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 188
Unit 7, Activity 12, Gasoline Reciprocal Teaching Record
Introduction to How Gas Prices Work
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 189
Unit 7, Activity 12, Gasoline Reciprocal Teaching Record
Breakdown of Gas Prices
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 190
Unit 7, Activity 12, Gasoline Reciprocal Teaching Record
Gas Prices Across the Country
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 191
Unit 7, Activity 12, Gasoline Reciprocal Teaching Record
OPEC and Gas Prices Around the World
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 192
Unit 7, Activity 12, Gasoline Reciprocal Teaching Record
Cause and Effect
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 193
Unit 7, Activity 12, Gasoline Reciprocal Teaching Record
Domestic Supplies
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 194
Unit 7, Activity 12, Gasoline Reciprocal Teaching Record
Arctic National Wildlife Refuge
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 195
Unit 7, Activity 12, Gasoline Reciprocal Teaching Record
Out of Gas
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 196
Unit 7, General Assessments, Transportation Jeopardy
Directions: Question the following answers you learned in this unit. Remember to phrase your
answer in the form of a question.
Answer
Question
The averaged fee for transporting all vehicles of a particular type to
all dealerships.
The words forming the acronym MSRP.
The price I would expect to receive for trading-in my used auto.
The vehicle operating costs that do not change from month-tomonth.
An example of a variable operating expense.
The name given to the decrease in value from year-to-year of my
vehicle.
The price I would advertise to sell a used vehicle.
Equations that perform calculations on values in your spreadsheet
worksheet, starts with an equal sign (=).
The type of lease that allows me the option to purchase the vehicle
at the end of the lease contract.
The predetermined value of an automobile in a lease contract.
Leads to vehicle ownership when the initial contract is paid.
The form of vehicle purchase that doesn’t allow me to modify my
vehicle.
The name given to using a vehicle on a short-term basis.
10/20/10.
The insurance coverage for property loss.
Because statistically they cause more accidents than females of the
same age.
The leading cause of death among 13-19-year-old males and
females in the United States.
The acronym for the Organization of the Petroleum Exporting
Countries.
Accounts for half of the price of gasoline at the pump.
The largest emergency petroleum supply in the world.
The typical time of year when demand for gas spikes.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 197
Unit 7, General Assessments, Transportation Jeopardy with Answers
Answer
Question
The averaged fee for transporting all vehicles of a particular type What is the destination
to all dealerships.
charge?
The words forming the acronym MSRP.
What is Manufacturer’s
Suggested Retail Price?
The price I would expect to receive for trading-in my used auto. What is Clean Trade-In
Value?
The vehicle operating costs that do not change from month-toWhat are fixed costs?
month.
An example of a variable operating expense.
What is gasoline cost?
The name given to the decrease in value from year-to-year of my What is vehicle depreciation?
vehicle.
The price I would advertise to sell a used vehicle.
What is Clean Retail Value?
Equations that perform calculations on values in your
What are formulas?
spreadsheet worksheet, starts with an equal sign (=).
The type of lease that allows me the option to purchase the
What is an open-ended lease?
vehicle at the end of the lease contract.
The predetermined value of an automobile in a lease contract.
What is residual, or future,
value?
Leads to vehicle ownership when the initial contract is paid.
What is buying a vehicle?
The form of vehicle purchase that doesn’t allow me to modify
What is leasing a vehicle?
my vehicle.
The name given to using a vehicle on a short-term basis.
What is renting a vehicle?
10/20/10.
What is the Louisiana
minimum liability insurance?
The insurance coverage for property loss.
What does the third number
represent?
Because statistically they cause more accidents than females of
Why does insurance cost
the same age.
more for teenage males?
The leading cause of death among 13-19-year-old males and
What is motor vehicle
females in the United States.
accidents?
The acronym for the Organization of the Petroleum Exporting
What is OPEC?
Countries.
Accounts for half of the price of gasoline at the pump.
What is the cost of crude oil?
The largest emergency petroleum supply in the world.
What is the Strategic
Petroleum Reserve?
The typical time of year when demand for gas spikes.
What is summer?
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 198
Unit 7, General Assessments, Car Purchase Essay Rubric
Car Purchase Essay
Name: ________________________
Date Submitted: ____________
1
Teacher:
Title of Work: ___________________
Criteria
Points
2
3
4
Reader has
Sequence of
difficulty following
work because
Organization information is difficult
to follow.
student jumps
around.
Student is
Student does not have
uncomfortable with
grasp of information;
Content
content and is able
student cannot answer
Knowledge
to demonstrate basic
questions about subject.
concepts.
Student presents
Information in
information in
logical, interesting
logical sequence
sequence which
which reader can
reader can follow.
follow.
____
Student
Student is at ease
demonstrates full
with content, but
knowledge (more
fails to elaborate.
than required).
____
Presentation has
Presentation has no more than two
Work has four or more
three misspellings
misspellings
Grammar and
spelling errors and/or
and/or grammatical
and/or
Spelling
grammatical errors.
errors.
grammatical
errors.
Work has three or Work has one or
Work is illegible.
four areas that are two areas that are
Neatness
sloppy.
sloppy.
Work does not have
Reference section
Work displays no
the appropriate
was completed
References
references.
number of required
incorrectly.
references.
Presentation has
no misspellings or
grammatical
errors.
____
Work is neatly
done.
____
Work displays the
correct number of
references, written
correctly.
____
Total---->
____
Comments:
Teacher Comments:
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Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 199
Unit 7, General Assessments, Quiz
1. J.J. Johnson plans to buy a Bentley Continental GT sedan with a MSRP of $178,236.17. The optional
features JJ is considering and their suggested prices follow: GPS alarm system, $2,200; 22” chrome
wheels with run-flat tires, $5,785 and extended warranty, $3,128. What is the MSRP of JJ’s Bentley if the
destination charge is $2,008?
2. Giancarlo Valenti bought a beautiful yellow Lamborghini Mercielago with an MSRP of $328,150. A
sales tax of 8.387% will be charged on the total purchase. Registration and license costs will be $359.
Giancarlo plans to make an 11% down payment. (Assume the down payment is made before taxes.)
a. What is the delivered price of the car?
b. What is the balance due on this purchase?
3. Ralf Emmerson bought a new Corvette for $43,567. He drove the car for three years and then traded it
in on a new Vette for $29,995.
a. The total depreciation for the three-year period was? $____________________
b. The average annual depreciation was? $__________________________
c. The rate of depreciation was? ______________________________%
4. Rebecca Renee Roberts-Reynolds paid $123,195 for her Mercedes-Benz S500 AMG sedan. Her
expenses for the first year were: gas, $5,193.14; oil, $101.19; insurance, $1,951.02; repairs and upkeep,
$122.70; license plates, $48; loss of interest at $2,338.23 on the car’s original cost; and depreciation
estimated at 14%.
a. The annual depreciation was? $_______________________
b. The total car operating expense for the year was? $_____________________
Type of Insurance
Coverage
Bodily Injury
Property Damage
Collision
Comprehensive
Coverage Limits
$25/$75,000
$200/$300,000
$15,000
$35,000
No deductible
$1,000 deductible
$100 deductible
$250 deductible
Driving to Work
19.94
78.93
99.12
127.56
359.84
19.98
130.92
103.52
Vehicle Used For
Racing on the
Weekends
122.93
404.99
235.19
414.00
1,234.91
1001.19
312.38
289.63
Touring Europe on
Holiday
41.92
128.92
165.22
196.99
807.68
345.71
147.17
126.84
5. Use table above to find the annual premium for each below.
a. For driving to work, $25/$75,000 bodily injury, $35,000 property damage, no
deductible on collision and $100 deductible on comprehensive. __________________
b. For touring Europe on Holiday, $200/$300,000 bodily injury, $35,000 property
damage, $1,000 deductible collision and $100 deductible comprehensive. ___________
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 200
Unit 7, General Assessments, Quiz with Answers
1. $191,357.17
2. a. $356,061.05
b. $319,925.06
3. a. $13,572
b. $4,524
c. 10.4%
4. a. $17,247.30
b. $27,001.58
5. a. $637.86
b. $818.79
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 201
Unit 7, Specific Assessments, Activity 6, TVM Master
Directions: Use a graphing calculator to answer the questions below.
Latisha is buying a car from a dealer that offers a $1500 rebate that can be taken either in cash or
used toward the down payment. The total cost of the car including taxes is $21,850, and since
she is putting 15% down, they are financing it at 7.9% interest for 60 months. Use the Finance
Mode and TVM to determine:
1.
2.
3.
4.
5.
Her monthly payments
Her total interest
How much her monthly payments would be if she added the rebate to her down payment.
Her total interest if she added the rebate to her down payment
How much additional savings she would get by adding her rebate to the down payment.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 202
Unit 7, Specific Assessments, Activity 6, TVM Master with Answers
1.
2.
3.
4.
5.
Her monthly payments.
$441.99
Her total interest.
$4,669.72
Her monthly payments would be if she added the rebate to her down payment. $411.65
Her total interest if she added the rebate to her down payment.
$4,349.13
How much additional savings would she get by adding her rebate to the down payment?
$320.59
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 203
Unit 7, Specific Assessments, Activity 7, Depreciation Analysis
Directions: Analyze the line graphs and estimate the answer for the accompanying
questions.
Use the graph above to answer question 1 – 3.
1. After how many years has the car lost all its value?
2. After how many years has the car lost half its value?
3. What is the approximate value of the car after 5 years?
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 204
Unit 7, Specific Assessments, Activity 7, Depreciation Analysis
Use the graph at right to answer
questions 4 – 6.
4. In which year of its life does
the car lose the most value?
5. After about how many years
has the car lost half its value?
6. What is the car’s
approximate value after 4
years?
Use the graph at left to answer
questions 7 – 9.
7. During which year does the
car lose the most value?
8. After about how many years
has the car lost half its value?
9. When is the automobile
worth $19,000?
10. Which graph would you surmise represents typical automobile depreciation? Explain
your answer.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 205
Unit 7, Specific Assessments, Activity 7, Depreciation Analysis with Answers
Test Solution.
1. About 7 years.
2. About 3.5 years.
3. About $9,000.
4. During the first year of ownership.
5. About 2 years.
6. About $6,000.
7. During the third year of ownership.
8. About 3 years.
9. Approximately the beginning of the second year of ownership.
10. Student answers will vary. The second graph, because I have learned that automobiles
depreciate more rapidly at the beginning of their useable life than later in their useable
life. This is why automobile value can be found in the purchasing of late model used
vehicles.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 206
Unit 7, Specific Assessments, Activity 11, Insurance Posters Rubric
Possible
Points
Element
Earned
Assessment
Peer
Teacher
The main theme is clear when one first looks at the
posters. A title helps to identify the theme.
Appropriate and accurate main ideas support the
theme.
There is wholeness about the posters. They do not
seem like a
collection of information.
The information in the posters is accurate and
shows that the student
thoroughly understands the concepts.
Space, shapes, textures, and colors provide
information themselves
and add to the over-all effectiveness of the posters.
Pictures, photographs, drawings, diagrams, graphs,
or other similar
devices add to the over-all effectiveness of the
posters.
The format of the posters is appropriate to the task
and to the audience
for which it is intended.
The posters accomplish their purpose with their
intended audience.
The posters are very neat and presentable.
The posters are creative and interesting.
Total:
After the posters are all hung on the walls of the classroom, ask the students to assess three
poster sets from other students. Average the peer assessments onto the one rubric sheet where the
teacher assesses the poster set. The student component of the grading should be no more than
25% of the overall grade for this activity.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 207
Unit 8, Activity 1, Mortgage Loan Table
Interest
Rate
5%
5.5%
6%
6.5%
7%
7.5%
8%
8.5%
9%
9.5%
10%
10
10.61
10.85
11.10
11.35
11.61
11.87
12.13
12.40
12.67
12.94
13.22
Monthly Payment for a $1000 Mortgage Loan
Length of Loan in Years
15
20
25
7.91
6.60
5.85
8.17
6.88
6.14
8.44
7.16
6.44
8.71
7.46
6.75
8.99
7.75
7.07
9.27
8.06
7.39
9.56
8.36
7.72
9.85
8.68
8.05
10.14
9.00
8.39
10.44
9.32
8.74
10.75
9.65
9.09
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
30
5.37
5.68
6.00
6.32
6.65
6.99
7.34
7.69
8.05
8.41
8.78
Page 208
Unit 8, Activity 3, Information About RESPA
The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first
passed in 1974. The purposes of RESPA are:
1. to help consumers become better shoppers for settlement services.
2. to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain
settlement services.
Details about RESPA
Corresponding with the above purposes:
1. RESPA requires that borrowers receive disclosures at various times. Some disclosures
spell out the costs associated with the settlement, outline lender servicing and escrow
account practices, and describe business relationships between settlement service
providers.
2. RESPA also prohibits certain practices that increase the cost of settlement services.
Section 8 of RESPA prohibits a person from giving or accepting any thing of value for
referrals of settlement service business related to a federally related mortgage loan. It also
prohibits a person from giving or accepting any part of a charge for services that are not
performed. Section 9 of RESPA prohibits home sellers from requiring home buyers to
purchase title insurance from a particular company.
RESPA in general
RESPA covers loans secured with a mortgage placed on a one-to-four family residential
property. These include most purchase loans, assumptions, refinances, property improvement
loans, and equity lines of credit. HUD's Office of RESPA and Interstate Land Sales is
responsible for enforcing RESPA.
RESPA required disclosures:
At the time of loan application
When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the
borrowers:
 a Special Information Booklet, which contains consumer information regarding various
real estate settlement services. (Required for purchase transactions only).
 a Good Faith Estimate (GFE) of settlement costs, which lists the charges the buyer is
likely to pay at settlement. This is only an estimate and the actual charges may differ. If a
lender requires the borrower to use a particular settlement provider, then the lender must
disclose this requirement on the GFE.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 209
Unit 8, Activity 3, Information About RESPA

a Mortgage Servicing Disclosure Statement, which discloses to the borrower whether the
lender intends to service the loan or transfer it to another lender. It also provides
information about complaint resolution.
If the borrowers don't get these documents at the time of application, the lender must mail them
within three business days of receiving the loan application.
If the lender turns down the loan within three days, however, then RESPA does not require the
lender to provide these documents.
The RESPA statute does not provide an explicit penalty for the failure to provide the Special
Information Booklet, Good Faith Estimate or Mortgage Servicing Statement. However, bank
regulators may choose to impose penalties on lenders who fail to comply with federal law. Please
read the section on RESPA enforcement for more information.
Disclosures before settlement/closing occurs
The terms "settlement" and "closing" can be and are used interchangeably.
An Affiliated Business Arrangement (AfBA) Disclosure is required whenever a settlement
service provider involved in a RESPA covered transaction refers the consumer to a provider with
whom the referring party has an ownership or other beneficial interest.
The referring party must give the AfBA disclosure to the consumer at or prior to the time of
referral. The disclosure must describe the business arrangement that exists between the two
providers and give the borrower an estimate of the second provider's charges.
Except in cases where a lender refers a borrower to an attorney, credit reporting agency or real
estate appraiser to represent the lender's interest in the transaction, the referring party may not
require the consumer to use the particular provider being referred.
The HUD-1 Settlement Statement is a standard form that clearly shows all charges imposed on
borrowers and sellers in connection with the settlement. RESPA allows the borrower to request
to see the HUD-1 Settlement Statement one day before the actual settlement. The settlement
agent must then provide the borrowers with a completed HUD-1 Settlement Statement based on
information known to the agent at that time.
Disclosures at settlement
The HUD-1 Settlement Statement shows the actual settlement costs of the loan transaction.
Separate forms may be prepared for the borrower and the seller. Where it is not the practice that
the borrower and the seller both attend the settlement, the HUD-1 should be mailed or delivered
as soon as practicable after settlement.
The Initial Escrow Statement itemizes the estimated taxes, insurance premiums and other
charges anticipated to be paid from the Escrow Account during the first twelve months of the
loan. It lists the Escrow payment amount and any required cushion. Although the statement is
usually given at settlement, the lender has 45 days from settlement to deliver it.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 210
Unit 8, Activity 3, Information About RESPA
Disclosures after settlement
Loan servicers must deliver to borrowers an Annual Escrow Statement once a year. The annual
Escrow account statement summarizes all escrow account deposits and payments during the
servicer's twelve month computation year. It also notifies the borrower of any shortages or
surpluses in the account and advises the borrower about the course of action being taken.
A Servicing Transfer Statement is required if the loan servicer sells or assigns the servicing
rights to a borrower's loan to another loan servicer. Generally, the loan servicer must notify the
borrower 15 days before the effective date of the loan transfer. As long the borrower makes a
timely payment to the old servicer within 60 days of the loan transfer, the borrower cannot be
penalized. The notice must include the name and address of the new servicer, toll-free telephone
numbers, and the date the new servicer will begin accepting payments.
RESPA Explained: Consumer Protections and Prohibited Practices
Section 8: kickbacks, fee-splitting, unearned fees
Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or any thing of
value in exchange for referrals of settlement service business involving a federally related
mortgage loan. In addition, RESPA prohibits fee splitting and receiving unearned fees for
services not actually performed.
Violations of Section 8's anti-kickback, referral fees and unearned fees provisions of RESPA are
subject to criminal and civil penalties. In a criminal case a person who violates Section 8 may be
fined up to $10,000 and imprisoned up to one year. In a private law suit a person who violates
Section 8 may be liable to the person charged for the settlement service an amount equal to three
times the amount of the charge paid for the service.
Section 9: Seller required title insurance
Section 9 of RESPA prohibits a seller from requiring the home buyer to use a particular title
insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller
who violates this provision for an amount equal to three times all charges made for the title
insurance.
Section 10: Limits on escrow accounts
Section 10 of RESPA sets limits on the amounts that a lender may require a borrower to put into
an escrow account for purposes of paying taxes, hazard insurance and other charges related to the
property. RESPA does not require lenders to impose an escrow account on borrowers; however,
certain government loan programs or lenders may require escrow accounts as a condition of the
loan.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 211
Unit 8, Activity 3, Information About RESPA
During the course of the loan, RESPA prohibits a lender from charging excessive amounts for
the escrow account. Each month the lender may require a borrower to pay into the escrow
account no more than 1/12 of the total of all disbursements payable during the year, plus an
amount necessary to pay for any shortage in the account. In addition, the lender may require a
cushion, not to exceed an amount equal to 1/6 of the total disbursements for the year.
The lender must perform an escrow account analysis once during the year and notify borrowers
of any shortage. Any excess of $50 or more must be returned to the borrower.
RESPA Enforcement
Civil law suits
Individuals have one (1) year to bring a private law suit to enforce violations of Section 8 or 9. A
person may bring an action for violations of Section 6 within three years. Lawsuits for violations
of Section 6, 8, or 9 may be brought in any federal district court in the district in which the
property is located or where the violation is alleged to have occurred.
HUD, a State Attorney General or State insurance commissioner may bring an injunctive action
to enforce violations of Section 6, 8 or 9 of RESPA within three (3) years.
Loan servicing complaints
Section 6 provides borrowers with important consumer protections relating to the servicing of
their loans. Under Section 6 of RESPA, borrowers who have a problem with the servicing of
their loan (including escrow account questions), should contact their loan servicer in writing,
outlining the nature of their complaint. The servicer must acknowledge the complaint in writing
within 20 business days of receipt of the complaint. Within 60 business days the servicer must
resolve the complaint by correcting the account or giving a statement of the reasons for its
position. Until the complaint is resolved, borrowers should continue to make the servicer's
required payment.
A borrower may bring a private law suit, or a group of borrowers may bring a class action suit,
within three years, against a servicer who fails to comply with Section 6's provisions. Borrowers
may obtain actual damages, as well as additional damages if there is a pattern of noncompliance.
Other enforcement actions
Under Section 10, HUD has authority to impose a civil penalty on loan servicers who do not
submit initial or annual escrow account statements to borrowers. Borrowers should contact
HUD's Office of RESPA and Interstate Land Sales to report servicers who fail to provide the
required escrow account statements.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 212
Unit 8, Activity 3, Information About RESPA
Filing a RESPA complaint
Persons, who believe a settlement service provider has violated RESPA in an area in which the
Department has enforcement authority (primarily sections 6, 8 and 9), may wish to file a
complaint. The complaint should outline the violation and identify the violators by name, address
and phone number. Complainants should also provide their names and phone numbers for follow
up questions from HUD. Requests for confidentiality will be honored. Complaints should be sent
to:
Director, Office of RESPA and Interstate Land Sales
US Department of Housing and Urban Development
Room 9154
451 7th Street, SW
Washington, DC 20410
Adopted from:
U.S. Department of Housing and Urban Development
451 7th Street, S.W., Washington, DC 20410
Telephone: (202) 708-1112
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 213
Unit 8, Activity 3, RESPA Notes
When did RESPA
become law?
What are its
purposes?
What does RESPA
cover, in general?
What are the
required disclosures
to the home buyer?
What does RESPA
have to do with
closing costs?
What is an Initial
Escrow Statement &
what does it do for
the homebuyer?
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 214
Unit 8, Activity 3, RESPA Notes
List and explain
section 8 of RESPA.
List and explain
section 9 of RESPA.
List and explain
section 10 of
RESPA.
List and explain
legal recourses of the
disgruntled buyer.
List the complaint
contact address at
HUD.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 215
Unit 8, Activity 5, Other Housing Costs
Task:
1.
2.
3.
4.
5.
This is a group activity, arrange into groups of three or four each.
As a group, discuss housing costs beyond mortgage or rent payments.
Use the concept map below to record responses.
Each circle should have a response.
We will discuss the concept maps after all groups are complete.
.
.
.
.
.
Other
Housing
Costs
.
.
.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 216
Unit 8, Activity 5, Other Housing Costs with Answers
A completed concept map may look like this. Student answers will vary.
Insurance
$88
Maintenance
Water &
Sewage
$75
$45
Internet
Connection
Electricity
Other
Housing
Costs
$30
Cable TV
$112
Natural Gas
$70
$32
Telephone
$48
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 217
Unit 8, Activity 7, Homeowners Insurance
Task:
1. Research homeowners insurance to answer:
1. What is homeowners insurance?
2. What is in a standard homeowners insurance policy?
3. Are there different types of policies?
4. Does my homeowners insurance cover flooding?
5. What type of disasters are covered?
6. Can I own a home without homeowners insurance?
7. Can I get insurance if I rent my home?
8. How much homeowners insurance do I need?
9. Do I need separate coverage for jewelry?
10. What factors do insurance companies use to determine the price of your policy?
2. Provide a comprehensive answer to these questions, not just one-sentence answers.
3. Produce a paper, in the form of an outline, containing the answers to the questions.
4. The papers must contain at least one chart or graph.
5. The papers must be typed.
6. Use the web address http://www.iii.org/individuals/homei/ as the primary source.
7. The outline should follow the format below.
I. What is homeowners insurance?
a.
b.
c.
II. What is in a standard homeowners insurance policy?
a.
b.
c.
III. Are there different types of policies?
a.
b.
c.
IV. Does my homeowners insurance cover flooding?
(Continue in the same manner.)
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 218
Unit 8, Activity 8, Rent Or Buy?
Should I buy or rent a home or apartment?
Top 10 Reasons to Buy a Home
1.
It will be Yours and Yours Alone
The freedom of owning your own home cannot begin to compare with the restrictions
that renters experience. You can paint the walls the color you like, hammer a nail
without the hassles from a landlord.
2. Lifestyle
Homeowners are a different breed. When you live in a neighborhood that is owner
occupied, your neighbors, like you, are more willing to invest their time, money, and
efforts to improve their property values and community.
3. Equity Buildup
Rental payments are gone once you have made them. But with each mortgage
payment, you are “buying” something tangible, you are building equity. The longer you
own your home, the larger the equity. At any time you can refinance to "withdraw" your
cash equity.
4. Keep Up with Inflation
A home is an investment that helps you keep up with inflation. Although not all homes
appreciate at the same rate, and some years are better than others, real estate has
historically kept pace with and usually appreciated faster than the rate of inflation.
5. Income Tax Benefits
All interest paid on a mortgage is deductible for income tax purposes. Remember, too,
that property taxes and closing points are deductible, and that special tax deductions
such as the Homestead Exemption and Energy Credits are also available to
homeowners.
6. Payback on Improvements
A renter who makes property improvements does not receive financial benefits from
them if they relocate. As a homeowner, you can realize some or all of the costs of
improvements when you sell your home.
7. Trade-Up Value
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 219
Unit 8, Activity 8, Rent Or Buy?
Even if your first home is not your “dream home,” you are working your way up to it.
With appreciation and some improvements, it may provide you with enough equity to
make a down payment on your “Dream Home” later.
8. Future Security
Unlike rent, which goes on forever, mortgage payments are temporary, providing you
with “rent free” living for your retirement. In addition, a mortgage payment with a fixed
interest rate will remain constant over the course of the note. Rental prices typically
increase 3-10% per year in many areas.
9. Investment Property
For some, investments in single-family homes are proving to be good tax shelters. You
can realize profits and tax benefits from having renters who do not know the benefits
of owning a home or investment property.
10. Don’t Let The Mortgage Interest Rate Fool You
You pay much less in interest than the mortgage rate of your loan, because the
interest you pay becomes tax deductible. Also deductible are many costs associated
with closing your loan.
Do You Know How Much Rent You Pay?
Monthly
Rent
$400
$500
$600
$700
$800
$900
$1000
$1500
3 Years
5 Years
10 Years
15 Years
30 Years
$15,431
$27,603
$66,319
$120,619
$453,412
$19,289
$34,504
$82,899
$150,774
$566,765
$23,147
$41,405
$99,478
$180,929
$680,118
$27,005
$48,306
$116,058
$211,084
$793,471
$30,863
$55,207
$132,638
$241,239
$908,823
$34,720
$62,108
$149,218
$271,393
$1,020,176
$38,578
$69,008
$165,798
$301,548
$1,133,530
$57,868
$103,513
$248,696
$452,332
$1,700,294
Assuming only a 7% annual Rent Increase
Should You Rent or Own?
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Rent Own
Page 220
Unit 8, Activity 8, Rent Or Buy?
Deduct mortgage interest and closing points in calculating income tax?
Deduct real estate taxes in calculating income tax?
No
Yes
No
Yes
Build Equity (Savings)?
No
Yes
Hedge against inflation (appreciation and profit potential)?
No
Yes
Improvements within the home become an investment in future value?
No
Yes
Can lease out or sell whenever you want to move?
No
Yes
Feeling of financial security?
No
Yes
Property can be put in trust?
No
Yes
Property can be passed on to heirs?
No
Yes
Property can be later refinanced to "withdraw" cash equity?
No
Yes
Fixed mortgage payments that help stabilize monthly living costs?
No
Yes
Source:
The Mortgage Doctor
5579 South Lewis Avenue Tulsa Oklahoma 74105
Phone 918-746-0700
http://www.docmortgage.com/htm/Ownership%20vs.%20Rent.htm
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 221
Unit 8, Activity 9, How Much Can You Afford?
Task:
1. Find, in the newspaper, a real estate listing for a home that you would someday
like to own, clip it out, and bring it to class.
2. Go to:
http://www.ginniemae.gov/2_prequal/intro_questions.asp?Section=YPTH
3. Use the “How Much Home Can You Afford?” Calculator and your chosen
career’s estimated annual income. Refer to the Career Exploration BLM
completed in Unit 5, Activity 9, to calculate how much of a mortgage payment
you will be able to afford.
4. Use these numbers as inputs:
a. Minimum Credit Card Payment: $900
b. Car Payment: $800
c. Other Monthly Obligations: $2000
5. Click “Get Estimate” and print the report.
6. Glue your dream-home listing to the upper-back of the report.
7. Below your listing, answer the question, “Can you afford it?”
a. Could you afford the house you chose?
b. Why did you choose this house?
c. What concessions could you make to modify (lower) your housing wants?
8. Turn-in the report.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 222
Unit 8, General Assessments, Calculation Test
1. The Greenwalds want to buy a condominium priced at $90,000. They will need to make a down
payment of 20% and pay closing costs of 3% of the purchase price.
a. How much cash will they need for the down payment?
b. How much of the purchase price must they borrow?
c. How much cash will they need for the closing costs?
2. Ed and Roberta Rogers bought a house at its market value of $70,000. They made a 25% down
payment and paid these closing costs: legal fees, $280; property survey, $150; title insurance,
$220; inspection fees, $350; loan origination fees, $400.
a. What was the amount of the down payment?
b. What was the total of the closing costs?
c. What percent were the closing costs of the purchase price to the nearest whole percent?
3. Ann Doyle will purchase a house for $53,500 on August 1. The house was appraised at
$58,000. On that date, she must make a down payment of 15% of the purchase price and pay
these closing costs: loan origination fees, $340; termite inspection fee, $80; legal fees, $420;
land survey costs, $115; title insurance, $210; prepaid taxes, $600; points, $535.
a. What total amount of cash must Ann have on August 1 to make the purchase?
b. What percent are the closing costs of the purchase price, to the nearest tenth of a
percent?
4. Tom and Jane Yurko estimate that their home depreciates 2% each year. If the home originally
cost $75,300, how much do they estimate for depreciation this year?
5. The home of the Collins family is estimated to depreciate at a rate of 3.2% each year. If the
home originally cost $52,700, how much will this home depreciate in 1 year?
6. Artie Brouillard bought a condominium. The former owner originally wanted $85,000 for the
home before selling it to Artie for $74,900. If the annual depreciation is estimated at 2.5%, how
much will it depreciate this year?
7. Marie Santos bought a house for $55,200 ten years ago. If she estimates depreciation at 1.8% a
year, how much has the house depreciated so far?
8. Ezra Wilkins bought a mobile home for $32,000 three years ago. He estimates that the home
depreciates at a 5% rate each year. How much does Ezra estimate the mobile home has
depreciated so far?
9. The Kerns want to buy a home. Their estimated first-year expenses are: mortgage interest,
$7,128; property taxes, $1,800; insurance, $515; depreciation, $1,680; maintenance and repairs,
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 223
Unit 8, General Assessments, Calculation Test
$1,237. They estimate lost interest income on savings as $1,472. They also expect to save
$3,112 on income taxes. Find their net cost of owning their home the first year.
10. Kirk and Edna Rowe own a home. They estimate their expenses to be: mortgage interest,
$10,180; property taxes, $3,690; insurance, $833; depreciation, $3,800; maintenance and
repairs, $900; lost interest income, $2,375. They expect to save $5,700 on income taxes from
home expense. What is their net cost of home ownership?
11. The Solos want to buy a home that costs $55,000. They must make a 30% down payment. They
estimate their expenses for the first year to be: mortgage interest, $4,914; property taxes,
$1,208; insurance, $260; lost interest income, $1,320; depreciation, 2% of the purchase price;
maintenance and repairs, $1,050. They expect to save $1,280 in income taxes because of home
expenses. What will be the net cost of the home the first year?
12. Trudy Hertz wants to buy a home for $64,800. She estimates her first-year expenses to be:
mortgage interest,$6,005; lost interest of $1,377; property taxes, $850; insurance, $395;
depreciation at 2.5% of the purchase price; maintenance and repairs, $1,400. She expects to
save $1,847 in taxes. What will be the net cost of owning the home in the first year?
13. After being in effect for 4 years, the rate of interest on Sol Retal’s variable rate mortgage has
changed from 12.5% to 10%. Sol’s old monthly payment was $763.25. Sol’s new monthly
payment is $655.01. How much less does Sol pay in one year at the new mortgage rate?
14. Rita Metarel’s monthly payment on her original 11.75% variable rate mortgage is $656.12.
Eight years later, the interest rate on her mortgage has been raised to 13.25%, and her new
monthly payment is $731.74. How much more will Rita pay in one year at the new mortgage
rate?
15. Your old $45,000, 30-year, 13.6% mortgage has a monthly payment of $518.98. Over the 6
years since you took out the loan, mortgage rates have dropped. You can now get a mortgage at
9.15%, which will result in a new monthly payment of $377.37. To refinance, you must pay
$990 in closing costs and a $510 prepayment penalty. By getting a new mortgage, find the net
amount you will save in…
a. The first year.
b. The second year.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 224
Unit 8, General Assessments, Calculation Test with Answers
1.
a. $18,000
b. $72,000
c. $2,700
2.
a. $17,500
b. $1,400
c. 2%
3.
a. $10,325
b. 4.3%
4. $1,506
5. $1,686.40
6. $1,872.50
7. $9,936
8. $4,800
9. $10,720
10. $16,078
11. $8,572
12. $9,800
13. $1,298.88
14. $907.44
15.
a. $199.32
b. $1,699.32
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 225
Unit 8, General Assessments, Writing Test
Respond to each statement as fully and completely as you can.
1. “I don’t need to shop around for a mortgage lender; I’ll never live in that house 30 years
anyway.”
2. “Why won’t the bank let me buy that $300,000 house? I could cut back in other places, if they
would only lend me the money.”
3. “I’ll buy the least amount of insurance I can. Nothing’s ever gonna happen anyway.”
4. “My parents have always rented; it’s good enough for me.”
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 226
Unit 8, General Assessments, Writing Test with Answers
Possible answers: Student answers will vary and should include concrete examples from this unit and
possibly reference to knowledge gained in previous units.
1. Even though you may not plan to be in a house for the duration of the mortgage, money is still
saved each month if you shop for and receive the best mortgage loan rate available to you.
2. The FHA has guidelines that total housing costs should not exceed 41% of your monthly net
pay. Most people would not “cut back” on the lifestyle they are accustomed to leading for the
length of time it takes to repay a mortgage loan.
3. Insurance is the assurance that all of the hard work that has gone into home ownership doesn’t
go for naught. Insurance is also the umbrella that protects your financial plan from the
unexpected “rainy day”. It provides shelter so you don’t loose assets already accumulated.
4. There are many advantages to home ownership: income tax benefits, a store of equity value,
and a hedge against inflation among many more.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 227
Unit 8, Specific Assessments, Activity 1, Graphing Calculator Solution
Directions: Use your prior knowledge of a graphing calculator to solve the following problem.
You should use the Finance mode and TVM to calculate monthly payments and the future value of the
college fund savings. Use the summation of interest to calculate the total interest paid on the home loan
and total interest earned on the college fund savings.
Jack and Sarah are expecting their first child on August 1st. They have just bought a new house and
will also move into the house on August 1st. The total amount of money financed is $135,000 for a
period of 30 years at an interest rate of 6.9%. They want to start now saving for their child’s future by
putting $200 per month in a college fund that will yield a return of 3.7% compounded monthly, and
will be available on the child’s 18th birthday. A friend told them that the smartest thing they could do
would be to add the $200 to their regular house payment and pay the mortgage off early. They could
then use the house payment money to send their child to college and would save a lot of money. They
were not sure if what the friend told them would be the best thing to do.
A)
Calculate the monthly payments required for the mortgage repayment.
B)
Calculate the total interest paid over 30 years.
C)
Calculate the time it would take to pay off the mortgage if $200 was added to each month’s
payment.
D)
Calculate the amount of interest saved.
E)
Calculate the amount of money in the college account on the child’s 18th birthday.
F)
Calculate the amount of interest earned.
G)
State whether you believe they should open a separate college account for their child or
apply the $200 each month to the payment. Justify your answer based only on the financial
facts uncovered.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 228
Unit 8, Specific Assessments, Activity 1, Graphing Calculator Solution with Answers
A. Calculate the monthly payments required for the mortgage repayment.
Use the TVM to calculate monthly payments.
B. Calculate the total interest paid over 30 years.
Use the Summation of the interest to calculate the total interest paid.
C. Calculate the time it would take to pay off the mortgage if $200 was added to each month’s
payment. Use the TVM to calculate the number of payments with the extra $200 per month.
D. Calculate the amount of interest saved.
Use the summation of interest to calculate the total interest paid.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 229
Unit 8, Specific Assessments, Activity 1, Graphing Calculator Solution with Answers
E. Calculate the amount of money in the college account on the child’s 18th birthday.
Use the TVM to calculate the future value if the $200 was deposited into the college account.
F. Calculate the amount of interest earned.
Use the summation of interest to calculate the total interest earned.
G. State whether you believe they should open a separate college account for their child or apply
the $200 each month to the payment. Justify your answer based only on the financial facts
uncovered.
Clearly the $83,137.46 saved by paying an extra $200 per month on the mortgage exceeds
the $18,061.16 earned on the college savings plan. The student should identify the savings
and evaluate Jack and Sarah’s choices, including a decision.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 230
Unit 8, Specific Assessments, Activity 2, Closing Cost
Closing Cost Expense Worksheet
Loan Origination Fee
1% of the loan amount
Discount "Points"
4 points
Credit Report
$55.00
Appraisal Fee
$400
Underwriting
$275
Processing
$300
Plat Drawing Inspection
$60.00
Parish Recording Fees
$50.00
Flood Certification
$20.00
Name and Assessment Searches
$24.00
(1 "Point" = 1% of the loan amount)
ARM Title Insurance Endorsement Fee $50.00
Mortgage Registration Tax
$2.30 per $1,000 of the loan amount
Closing Fee
$250.00
Miscellaneous Fees
$350.00
Prepaid Interim Interest
15 days
(Loan amount x interest rate = annual interest, divided by 12 months = monthly
interest)
Homeowners Insurance Premium
(1st year due in full)
The annual premium is computed by multiplying the
purchase price by $4.00 per one thousand
Property Taxes
(1st year due in full)
Rate of assessment: 45%
Tax rate: 47.537 mills
Use the above Closing Cost Expense Worksheet to calculate the closing cost for a home selling for
$185,000 with an annual interest rate of 7.10%.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 231
Unit 8, Specific Assessments, Activity 2, Closing Cost with Answers
Closing Cost Expense Worksheet
Loan Origination
Fee
Answers
1% of the loan amount
$1,850
Discount "Points" 4(1 points
"Point" = 1% of the loan amount)
$7,400
Credit Report
$55.00
$55.00
Appraisal Fee
$400
$400.00
Underwriting
$275
$275.00
Processing
$300
$300.00
Plat Drawing
Inspection
$60.00
$60.00
Parish Recording
Fees
$50.00
$50.00
Flood Certification $20.00
$20.00
Name and
Assessment
Searches
$24.00
$24.00
ARM Title
Insurance
Endorsement Fee
$50.00
$50.00
Mortgage
Registration Tax
$2.30 per $1,000 of the loan amount
$425.50
Closing Fee
$250.00
$250.00
Misc. Fee's
$350.00
$350.00
Prepaid Interim
Interest
15 days
Homeowners
Insurance
Premium
(Loan amount x interest rate = annual interest, divided by 365 days = daily
interest)
The annual premium is computed by multiplying the
purchase price by $4.00 per one thousand
$539.79
$740
(1st year due in full)
Property Taxes
(1st year due in full)
Rate of assessment: 45%
Tax rate: 47.537 mills
$3,957.46
Total
$16,746.75
Use the above Closing Cost Expense Worksheet to calculate the closing cost for a home selling for
$185,000 with an annual interest rate of 7.10%.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 232
Unit 8, Specific Assessments, Activity 6, Rental Rubric
Performance: Completing a Rental Agreement
CATEGORY/
Points
Format
25% of grade
Capitalization and
Punctuation
Information and
Knowledge
25% of grade
50% of grade
4
Thorough completion of
application including
name, address, previous
addresses, references
Demonstrates correct
usage of end punctuation,
commas, and
capitalization, including
abbreviations
Includes specific details of
credit history and job
contact information
3
A substantial amount of
application is completed
including name, address,
and at least one other
component
Demonstrates a substantial
amount of knowledge of
punctuation and
capitalization (2-5 errors)
Has minor information
missing on details of credit
history and job contact
information
2
Partial or incomplete
application which shows
only two components
Moderately effective use Provides partial evidence
of punctuation and
of credit history and job
capitalization (6-10 errors) contact information
1
Incomplete or serious
Minimally effective use of Major amount of
misunderstanding of how capitalization and
information missing and
to complete the application punctuation (11 or more
no history
errors)
Rubric generated at: http://rubistar.4teachers.org/index.php
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 233
Unit 8, Specific Assessments, Activity 8, Internet Research Rubric
Completing Internet Research
CATEGORY
4 Points
Independently enters
website address
correctly and
efficiently locates
website
3 Points
Independently
enters website
address correctly
after selfcorrecting for
errors and locates
website
2 Points
Asks for assistance
from teacher or
peer and then able
to enter website
address or to use
browser
1 Point
Despite repeated
assistance unable
to enter website
address OR doesn't
ask for assistance
from teacher or
peer
Independently able to
use mouse and
browser efficiently to
navigate the website
Independently able
to use mouse and
browser to
navigate website
after selfcorrecting for
errors
Asks for assistance
from teacher or
peer and then able
to navigate the
website or use
browser
Despite repeated
assistance unable
to navigate website
or use browser OR
does not ask for
assistance from
teacher or peer
Independently able to
Locating
locate information
Relevant
Information relevant to topic on
website
Independently able
to locate
information
relevant to topic on
website after selfcorrecting for
errors
Asks for assistance
from teacher or
peer and then able
to locate relevant
information on the
topic on website
Despite repeated
assistance unable
to locate relevant
information on the
website OR does
not ask for
assistance from
teacher or peer
Independently able to
Selecting
Important discern and select
Information important information
directly supportive of
research topic
Independently able
to discern and
select important
information
directly supportive
of research topic
after selfcorrecting for
errors
Asks for assistance
from teacher or
peer and then able
to discern and
select important
information
directly supportive
of research topic
Despite repeated
assistance unable
to discern and
select important
information
directly supportive
of research topic
OR does not ask
for assistance from
teacher or peers
Independently able to
neatly and accurately
document in
notes/first draft the
information in own
words from website
Independently able
to neatly and
accurately
document in notes
the information
from the website in
notes/first draft in
own words with
Asks for assistance
from teacher or
peer and then able
to neatly and
accurately
document in
notes/first draft the
information from
Despite repeated
assistance, unable
to neatly and
accurately
document in
notes/first draft the
information from
the website in own
Locating
Internet
Website
Navigating
Website
Documenting
Information in
Notes/First
Draft
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 234
Unit 8, Specific Assessments, Activity 8, Internet Research Rubric
not more than 5
the website in own
corrections during words with not
teacher review
more than 10
corrections during
teacher review
Completes
Assignment
Independently able to Independently able
complete assignment to complete
assignment after
self-correcting or 2
requests for
assistance from
teacher
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Asks for assistance
from teacher or
peer more then 5
times and then able
to complete
assignment
words OR
plagiarizes from
website OR does
not produce
notes/first draft or
product is illegible
Despite repeated
assistance is
unable to complete
assignment OR
chooses not to
complete
assignment
Page 235
Unit 9, Activity 1, Stock Portfolio
Task:
1. This activity will span the next two weeks.
2. Each student will begin with a hypothetical $50,000 to invest in common stocks listed on the
New York Stock Exchange (NYSE).
3. You will be given two days to research companies listed on the NYSE and choose your stock
investments. http://www.nyse.com/
4. Each student must invest as close to possible all of his/her $50,000 on NYSE listed companies.
5. Students must invest in common stocks of 10 companies.
6. Complete the Portfolio Buy Sheet BLM on the day of your portfolio investment.
7. Each day complete the Company Sheet BLM table for each company you’ve invested in. You
can check the closing price of your stocks at the above NYSE web address, the daily newspaper
or the stock ticker that runs on CNBC™ in the evenings.
8. At the end of the two-week investment period, complete the Portfolio Tally Sheet BLM.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 236
Unit 9, Activity 1, Portfolio Buy Sheet
Portfolio Buy Sheet
Date:
Name:
Symbol
Full name of
corporation
Purchase price
per share
Number of
shares
Purchase
Price
Portfolio Total Purchase Price
(Buy as close to $50,000 as possible.)
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 237
Unit 9, Activity 1, Company Sheet
Update each day for each company.
NYSE Investments - Company Sheet
Company
Symbol
Purchase Price
Shares
Purchased
$
$
$
Day 3 close
$
Day 3
profit/loss
Day 5 close
$
Day 6
profit/loss
$
Day 8 close
$
Day 9
profit/loss
$
Total
profit/loss
Day 6 close
Day 7
profit/loss
Day 9 close
Day 4
profit/loss
$
$
$
$
Day 4 close
Day 5
profit/loss
Day 7 close
$
$
$
Day 2
profit/loss
Day 2 close
$
$
$
$
Day 1
profit/loss
Day 1 close
Total
Investment
Day 8
profit/loss
$
Day 10 close
$
Day 10
profit/loss
$
$
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 238
Unit 9, Activity 1, Portfolio Tally Sheet
NYSE Investments - Tally Sheet
Company
Shares
purchases
Purchase
price
Final price
Investment
results
Profit/Loss
Portfolio Total
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 239
Unit 9, Activity 2, Newspaper Stock Listings Notes
52-week Hi
52-week Lo
Stock
Symbol
Dividend
Yield Percentage
Price to Earnings
Ratio
Volume 100s
Hi
Lo
Close
Net Change
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 240
Unit 9, Activity 2, Newspaper Listings
Task: Bring the financial section of a newspaper to class.
Discussion Topic: How to read the stock market tables. Use the Newspaper Stock Listings BLM
to take notes during the discussion.
Example newspaper page excerpt
52 Week
Stock
Hi
Lo
49.95 24.40 EKodak
88.68 55.12 Eaton
47.88 28.50 Ecolab
Sym
Div
EK
ETN
ECL
1.80
1.76
-
Yld
%
5.4
2.1
-
PE
129
39
30
Vol
Hi
Lo Close
100s
17348 33.79 33.32 33.55
3555 85.65 84.79 84.81
2069 44.21 43.77 44.21
Net
Chg
-.19
-1.09
+.44
Task: In your financial section, find the ten stocks you chose to track on your Portfolio Buy
Sheet BLM from activity 1 and complete the table below.
52 Week
Hi
Lo
Stock
Sym
Div
Yld
%
PE
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Vol
100s
Hi
Lo
Close
Net
Chg
Page 241
Unit 9, Activity 3, Business Television Opinionnaire
What Are Your Opinions About Watching Business Television?
Directions: After each statement, write SA (strongly agree), A (agree), D (disagree), or SD
(strongly disagree). Then in the space provided, briefly explain the reasons for your opinions.
1. I can gain valuable insight into the world around me by watching business programming on
television. _________
Your reasons:
2. Business television is only for rich people._________
Your reasons:
3. Business television is boring stuff I won’t care about._________
Your reasons:
4. I can’t learn anything relevant to my life by watching business television._________
Your reasons:
5. In the future I may enjoy watching business television._________
Your reasons:
Day of week:_________________________________________
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 242
Unit 9, Activity 3, Nightly Notes
Name:_____________________________Day of Week:___________________________
Directions. Use this worksheet to record your notes from watching “Nightly Business Report.”
1. Date of episode:_____________________________
2. Summary of major topics covered with relevant points from each article.
3. Closing numbers for the
Dow Jones Industrial Average ____________________________
NASDAQ _____________________________
S&P 500 ______________________________
Light Sweet Crude ____________________________
Brent North Sea Crude ____________________________
4. List any topics that would directly affect your financial stability and how the affect would
manifest itself.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 243
Unit 9, Activity 5, Introduction to Mutual Funds
What They Are
A mutual fund is a company that pools money from many investors and invests the money in
stocks, bonds, short-term money-market instruments, other securities or assets, or some
combination of these investments. The combined holdings the mutual fund owns are known as
its portfolio. Each share represents an investor's proportionate ownership of the fund's holdings
and the income those holdings generate.
Some of the traditional, distinguishing characteristics of mutual funds include the following:




Investors purchase mutual fund shares from the fund itself (or through a broker for the
fund).
The price that investors pay for mutual fund shares is the fund's per share net asset value
(NAV) plus any shareholder fees that the fund imposes at the time of purchase (such as
sales loads).
Mutual fund shares are "redeemable," meaning investors can sell their shares back to the
fund (or to a broker acting for the fund).
Mutual funds generally create and sell new shares to accommodate new investors. In
other words, they sell their shares on a continuous basis, although some funds stop selling
when, for example, they become too large.
Advantages and Disadvantages
Every investment has advantages and disadvantages. For some investors, mutual funds provide
an attractive investment choice because they generally offer the following features:

Professional Management — Professional money managers research, select, and monitor
the performance of the securities, stocks/bonds/etc., the fund purchases.

Diversification — Diversification is an investing strategy that can be neatly summed up
as "Don't put all your eggs in one basket." Spreading your investments across a wide
range of companies and industry sectors can help lower your risk if a company or sector
fails. Some investors find it easier to achieve diversification through ownership of mutual
funds rather than through ownership of individual stocks or bonds.

Affordability — Some mutual funds accommodate investors who don't have a lot of
money to invest by setting relatively low dollar amounts for initial purchases, subsequent
monthly purchases, or both.

Liquidity — Mutual fund investors can readily redeem their shares at the current NAV —
plus any fees and charges assessed on redemption — at any time.
But mutual funds also have features that some investors might view as disadvantages, such as:

Costs Despite Negative Returns — Investors must pay sales charges, annual fees, and
other expenses, regardless of how the fund performs. And, depending on the timing of
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 244
Unit 9, Activity 5, Introduction to Mutual Funds


their investment, investors may also have to pay taxes on any capital gains distribution
they receive — even if the fund went on to perform poorly after they bought shares.
Lack of Control — Investors typically cannot ascertain the exact make-up of a fund's
portfolio at any given time, nor can they directly influence which securities the fund
manager buys and sells or the timing of those trades.
Price Uncertainty — With an individual stock, you can obtain real-time (or close to realtime) pricing information with relative ease by checking financial websites or by calling
your broker. You can also monitor how a stock's price changes from hour to hour — or
even second to second. By contrast, with a mutual fund, the price at which you purchase
or redeem shares will typically depend on the fund's NAV, which the fund might not
calculate until many hours after you've placed your order. In general, mutual funds must
calculate their NAV at least once every business day, typically after the major U.S.
exchanges close.
Different Types of Funds
When it comes to investing in mutual funds, investors have literally thousands of choices. Before
you invest in any given fund, decide whether the investment strategy and risks of the fund are a
good fit for you. The first step to successful investing is figuring out your financial goals and risk
tolerance — either on your own or with the help of a financial professional. Once you know for
what you're saving, when you'll need the money, and how much risk you can tolerate, you can
more easily narrow your choices.
Most mutual funds fall into one of three main categories — money market funds, bond funds
(also called "fixed income" funds), and stock funds (also called "equity" funds). Each type has
different features and different risks and rewards. Generally, the higher the potential return, the
higher the risk of loss.
Money Market Funds
Money market funds have relatively low risks compared to other mutual funds (and most
other investments). By law, they can invest in only certain high-quality, short-term
investments issued by the U.S. government, U.S. corporations, and state and local
governments. Investor losses have been rare, but they are possible.
Money market funds pay dividends that generally reflect short-term interest rates, and
historically the returns for money market funds have been lower than for either bond or
stock funds. That's why "inflation risk" — the risk that inflation will outpace and erode
investment returns over time — can be a potential concern for investors in money market
funds.
Bond Funds
Bond funds generally have higher risks than money market funds, largely because they
typically pursue strategies aimed at producing higher yields. Unlike money market funds,
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 245
Unit 9, Activity 5, Introduction to Mutual Funds
the SEC's rules do not restrict bond funds to high-quality or short-term investments.
Because there are many different types of bonds, bond funds can vary dramatically in
their risks and rewards. Some of the risks associated with bond funds include:
Credit Risk — the possibility that companies or other issuers whose bonds are owned by
the fund may fail to pay their debts (including the debt owed to holders of their bonds).
Interest Rate Risk — the risk that the market value of the bonds will go down when
interest rates go up. Because of this, you can lose money in any bond fund.
Prepayment Risk — the chance that a bond will be paid off early. For example, a bond
issuer may decide to pay off (or "retire") its debt. When this happens, the fund may not
be able to reinvest the proceeds in an investment with as high a return or yield.
Stock Funds
Although a stock fund's value can rise and fall quickly (and dramatically) over the short
term, historically stocks have performed better over the long term than other types of
investments — including corporate bonds, government bonds, and treasury securities.
Overall "market risk" poses the greatest potential danger for investors in stocks funds.
Stock prices can fluctuate for a broad range of reasons — such as the overall strength of
the economy or demand for particular products or services.
Not all stock funds are the same. For example:

Growth funds focus on stocks that may not pay a regular dividend but have the
potential for large capital gains.

Income funds invest in stocks that pay regular dividends.

Index funds aim to achieve the same return as a particular market index, such as
the S&P 500 Composite Stock Price Index, by investing in all — or perhaps a
representative sample — of the companies included in an index.

Sector funds may specialize in a particular industry segment, such as technology
or consumer products stocks.
How to Buy and Sell Shares
You can purchase shares in some mutual funds by contacting the fund directly. Other mutual
fund shares are sold mainly through brokers, banks, financial planners, or insurance agents. All
mutual funds will redeem (buy back) your shares on any business day and must send you the
payment within seven days.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 246
Unit 9, Activity 5, Introduction to Mutual Funds
The easiest way to determine the value of your shares is to call the fund's toll-free number or
visit its website. The financial pages of major newspapers sometimes print the NAVs for various
mutual funds. When you buy shares, you pay the current NAV per share plus any fee the fund
assesses at the time of purchase, such as a purchase sales load or other type of purchase fee.
When you sell your shares, the fund will pay you the NAV minus any fee the fund assesses at the
time of redemption, such as a deferred (or back-end) sales load or redemption fee. A fund's NAV
goes up or down daily as its holdings change in value.
How Funds Can Earn Money for You
You can earn money from your investment in three ways:
1. Dividend Payments — A fund may earn income in the form of dividends and interest on
the securities in its portfolio. The fund then pays its shareholders nearly all of the income
(minus disclosed expenses) it has earned in the form of dividends.
2. Capital Gains Distributions — The price of the securities a fund owns may increase.
When a fund sells a security that has increased in price, the fund has a capital gain. At the
end of the year, most funds distribute these capital gains (minus any capital losses) to
investors.
3. Increased NAV — If the market value of a fund's portfolio increases after deduction of
expenses and liabilities, then the value (NAV) of the fund and its shares increases. The
higher NAV reflects the higher value of your investment.
With respect to dividend payments and capital gains distributions, funds usually will give you a
choice: the fund can send you a check or other form of payment, or you can have your dividends
or distributions reinvested in the fund to buy more shares (often without paying an additional
sales load).
Degrees of Risk
All funds carry some level of risk. You may lose some or all of the money you invest — your
principal — because the securities held by a fund go up and down in value. Dividend or interest
payments may also fluctuate as market conditions change.
Before you invest, be sure to read a fund's prospectus and shareholder reports to learn about its
investment strategy and the potential risks. Funds with higher rates of return may take risks that
are beyond your comfort level and are inconsistent with your financial goals.
Fees and Expenses
As with any business, running a mutual fund involves costs — including shareholder transaction
costs, investment advisory fees, and marketing and distribution expenses. Funds pass along these
costs to investors by imposing fees and expenses. It is important that you understand these
charges because they lower your returns. SEC rules require funds to disclose both shareholder
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 247
Unit 9, Activity 5, Introduction to Mutual Funds
fees and operating expenses in a "fee table" near the front of a fund's prospectus. The list below
will help you decode the fee table and understand the various fees a fund may impose:

Sales Charge (Load) on Purchases — the amount you pay when you buy shares in a
mutual fund. Also known as a "front-end load," this fee typically goes to the brokers that
sell the fund's shares. Front-end loads reduce the amount of your investment.

Purchase Fee — another type of fee that some funds charge their shareholders when they
buy shares. Unlike a front-end sales load, a purchase fee is paid to the fund (not to a
broker) and is typically imposed to defray some of the fund's costs associated with the
purchase.

Deferred Sales Charge (Load) — a fee you pay when you sell your shares. Also known as
a "back-end load," this fee typically goes to the brokers that sell the fund's shares. The
most common type of back-end sales load is the "contingent deferred sales load" (also
known as a "CDSC" or "CDSL"). The amount of this type of load will depend on how
long the investor holds his or her shares and typically decreases to zero if the investor
holds his or her shares long enough.

Redemption Fee — another type of fee that some funds charge their shareholders when
they sell or redeem shares. Unlike a deferred sales load, a redemption fee is paid to the
fund (not to a broker) and is typically used to defray fund costs associated with a
shareholder's redemption.

Management Fees — fees that are paid out of fund assets to the fund's investment adviser
for investment portfolio management, any other management fees payable to the fund's
investment adviser or its affiliates, and administrative fees payable to the investment
adviser that are not included in the "Other Expenses" category.

Distribution Fees ("12b-1" Fees) — fees paid by the fund out of fund assets to cover the
costs of marketing and selling fund shares and sometimes to cover the costs of providing
shareholder services. "Distribution fees" include fees to compensate brokers and others
who sell fund shares and to pay for advertising, the printing and mailing of prospectuses
to new investors, and the printing and mailing of sales literature. "Shareholder Service
Fees" are fees paid to persons to respond to investor inquiries and provide investors with
information about their investments.

Other Expenses — expenses not included under "Management Fees" or "Distribution or
Service (12b-1) Fees," such as any shareholder service expenses that are not already
included in the 12b-1 fees, custodial expenses, legal and accounting expenses, transfer
agent expenses, and other administrative expenses.
Be sure to review carefully the fee tables of any funds you're considering, including no-load
funds. Even small differences in fees can translate into large differences in returns over time. For
example, if you invested $10,000 in a fund that produced a 10% annual return before expenses
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 248
Unit 9, Activity 5, Introduction to Mutual Funds
and had annual operating expenses of 1.5%, then after 20 years you would have roughly
$49,725. But if the fund had expenses of only 0.5%, then you would end up with $60,858, an
18% difference.
A Word About "No-Load" Funds
Some funds call themselves "no-load." As the name implies, this means that the fund does not
charge any type of sales load. But, as discussed above, not every type of shareholder fee is a
"sales load." A no-load fund may charge fees that are not sales loads, such as purchase fees,
redemption fees, exchange fees, and account fees. No-load funds will also have operating
expenses.
Source: U.S. Securities and Exchange Commission online publication “Invest Wisely: An Introduction to Mutual
Funds,” located on the Internet at http://www.sec.gov/investor/pubs/inwsmf.htm
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 249
Unit 9, Activity 5, Discussion Guide
What Are They
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 250
Unit 9, Activity 5, Discussion Guide
Advantages and Disadvantages
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 251
Unit 9, Activity 5, Discussion Guide
Different Types of Funds
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 252
Unit 9, Activity 5, Discussion Guide
How Funds Can Earn Money for You
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 253
Unit 9, Activity 5, Discussion Guide
Fees and Expenses
Predictions:
Questions:
Clarifications:
Summary:
Was the prediction confirmed?
Yes
No
Details:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 254
Unit 9, Activity 7, Risk vs. Reward
Some forms of investing are inherently more risky than other forms. Some forms of investing
have built-in protections to minimize risk. It is important that you know the risk and potential
reward of investments prior to investing in them. Complete this task to deepen your
understanding of the risk/reward relationship.
Task:
1. Research the investment risk/reward relationship.
2. Produce a poster-sized graphic of the risk/reward continuum for various investment
types. At the bottom of the poster, list three ways to minimize investment risk over the
long term.
3. Include topics such as: Diversification, Dollar-Cost Averaging, and Asset Allocation.
4. Look at the sample on the reverse side for guidance.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 255
Unit 9, Activity 7, Risk vs. Reward
Pen ny
St ock
Commodities
&
Commodities
Derivitives
Derivatives
Main Idea
Speculative
Collectibles
Stock/Bonds/Mutual Funds
Speculative Stocks/Bonds/Mutual
Funds
Real Estate
Blue Chip Common Stock & Mutual Funds
Blue Chip Common Stock & Mutual Funds
Real Estate
Growth Mutual Funds
Balanced Preferred
Mutual Stock
Funds
High-Grade
Preferred
StockConvertible
& Convertible
High-Grade
Bonds Bonds
Balanced & Index Mutual Funds
Money
Accounts
or Mutual
MoneyMarket
Market Accounts
& Mutual
Funds Funds
High-Grade
Corporat
e Bonds
or Funds
Mutual Funds
High-GradeMunicipal
Municipal &&Corporate
Bonds
& Mutual
Insured Savings/Checking Accounts
Insured Checking Accounts
U.S. Savings Bonds Certificates of Deposit
Deposit
U.S. Savings BondsCertificates of Treasury
Issues (T-Bills)
Treasury Issues ( T-Bills)
Methods to reduce risk:
Insurance
Diversification
Dollar-Cost Averaging
Asset Allocation
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 256
Unit 9, Activity 8, Life Insurance Terms
Task: Create a glossary of the life insurance terms below. The following web addresses may be
helpful. http://www.iii.org/individuals/life/, http://www.ambest.com/resource/glossary.html#I
Term life
Definition:
Characteristics:
Examples/Relationship:
Whole life
Definition:
Characteristics:
Examples/Relationship:
Universal life
Definition:
Characteristics:
Examples/Relationship:
Variable life
Definition:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 257
Unit 9, Activity 8, Life Insurance Terms
Characteristics:
Examples/Relationship:
Adverse selection
Definition:
Characteristics:
Examples/Relationship:
Beneficiary
Definition:
Characteristics:
Examples/Relationship:
Cash value
Definition:
Characteristics:
Examples/Relationship:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 258
Unit 9, Activity 8, Life Insurance Terms
Contestability period
Definition:
Characteristics:
Examples/Relationship:
Indemnify
Definition:
Characteristics:
Examples/Relationship:
Medical Information Bureau
Definition:
Characteristics:
Examples/Relationship:
Preferred Risk
Definition:
Characteristics:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 259
Unit 9, Activity 8, Life Insurance Terms
Examples/Relationship:
Rated Policy
Definition:
Characteristics:
Examples/Relationship:
Second-To-Die Policy
Definition:
Characteristics:
Examples/Relationship:
Single premium life
Definition:
Characteristics:
Examples/Relationship:
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 260
Unit 9, Activity 9, Health Insurance: Understanding What It Covers
What are "covered services"?
Your health insurance policy is an agreement between you and your insurance company. The
policy lists a package of medical benefits such as tests, drugs and treatment services. The
insurance company agrees to cover the cost of certain benefits listed in your policy. These are
called "covered services." Your policy also lists the kinds of services that are not covered by
your insurance company. You have to pay for any uncovered medical care that you receive.
What is a medical necessity? Is that different from a covered service?
Keep in mind that a medical necessity is not the same as a medical benefit. A medical necessity
is something that your doctor has decided is necessary. A medical benefit is something that your
insurance plan has agreed to cover. In some cases, your doctor might decide that you need
medical care that is not covered by your insurance policy. Insurance companies determine what
tests, drugs and services they will cover. These choices are based on their understanding of the
kinds of medical care that most patients need. Your insurance company's choices may mean that
the test, drug or service you need isn't covered by your policy.
What should I do?
Your doctor will try to be familiar with your insurance coverage so he or she can provide you
with covered care. However, there are so many different insurance plans, that it's not possible for
your doctor to know the specific details of each plan. By understanding your insurance coverage,
you can help your doctor recommend medical care that is covered in your plan.
Take the time to read your insurance policy. It's better to know what your insurance company
will pay for before you receive a service, get tested or fill a prescription. Some kinds of care may
have to be approved by your insurance company before your doctor can provide them.
If you still have questions about your coverage, call your insurance company and ask a
representative to explain it. Remember that your insurance company, not your doctor, makes
decisions about what will be paid for and what will not.
What happens if my doctor recommends care that isn't covered by my insurance?
Most of the things your doctor recommends will be covered by your plan, but some may not.
When you have a test or treatment that isn't covered, or you get a prescription filled for a drug
that isn't covered, your insurance company won't pay the bill. This is often called "denying the
claim." You can still obtain the treatment your doctor recommended, but you will have to pay for
it yourself. If your insurance company denies your claim, you have the right to appeal
(challenge) the decision. Before you decide to appeal, know your insurance company's appeal
process. This should be discussed in your plan handbook. Also, ask your doctor for his or her
opinion. If your doctor thinks it's right to make an appeal, he or she may be able to help you
through the process.
To get more information on this subject, talk to your family doctor.
Copyright © 2001-2003 American Academy of Family Physicians
Permission is granted to print and photocopy this material for nonprofit educational uses.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 261
Unit 9, Activity 9, Health Insurance on Trial
Task:
1. This is a five-day activity.
Discussion Topic: The rising burden on society to provide quality healthcare to our growing
masses.
 Is healthcare too expensive?
 Why are healthcare costs rising at a rate much higher than core inflation?
 Who should be responsible for paying the rising costs of healthcare?
o Society as a whole through higher taxes
o Individuals through higher group insurance rates
 What about those who can’t pay?
 What about prescription medication? Who should pay?
o Society as a whole (higher taxes)
o Individuals (potentially greater, disproportionate individual burden)
 What would cause healthcare rates to rise so high so fast?
o Shortage of doctors
o Shortage of medical facilities
o Shortage of prescription medication
 What role does medical technology play in rising costs?
 Does a healthy, long life have a price? If so, what is it and who decides?
2. This is a group activity, I will assign groups.
3. Each group will research a healthcare topic based on similar points of view.
4. For example:
 Social medicine, society pays for everyone’s healthcare costs
 Private medicine, individuals pay for their own healthcare needs
 Middle-Of-The-Road medicine, helps those that need help and those that can, pay
Mock Trial. HEALTHCARE: HOW DO WE FIX IT? Each working group will be a defensive
team for the defense of the group’s point-of-view concerning healthcare. The groups should
prepare a defense to present to a judge on day 5 of this activity.
Days 1 through 4. Each working group will have 4 days to research and plan for a defensive
argument based on the group’s research and prevailing point of view. Prepare a thesis to phrase
your group’s point-of-view and research to support the thesis. Be prepared to present your thesis,
with research, supporting arguments, and visual aids at the trial.
Day 5. A judge will preside over our mock trial of the healthcare issue. Each group will present
their researched argument to the judge with facts, conjecture and visual displays. While one
group is presenting, the other groups can serve as the jury for the argument. The idle groups
should take notes and respond to the judge as necessary.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 262
Unit 9, General Assessments, Building Wealth Quiz
Name:________________________________________
Answer each question as completely as possible.
1. Explain dollar cost averaging and why it is important.
2. Why is it important to write down your financial goals?
3. Explain stock appreciation.
4. What are mutual funds?
5. Why are IRAs and 401(k)s important to retirement investment planning?
6. Explain the risk/reward continuum of investing.
7. How does life insurance fit into your financial plan?
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 263
Unit 9, General Assessments, Building Wealth Quiz with Answers
1. Explain dollar cost averaging and why it is important.
Dollar cost averaging is a technique designed to reduce market risk through the systematic
purchase of securities at predetermined intervals and set amounts.
2. Why is it important to write down your financial goals?
Written goals allow you to track progress toward reaching your personal financial goals.
3. Explain stock appreciation.
An increase in the value of stock in a company.
4. What are mutual funds?
A mutual fund is a company that pools money from many investors and invests the money in
stocks, bonds, short-term money-market instruments, other securities or assets, or some
combination of these investments.
5. Why are IRAs and 401(k)s important to retirement investment planning?
Individual Retirement Account – lets you build wealth and retirement security; grows tax-free
until you retire and withdraw it.
A retirement account at a place of employment; you contribute a percentage of before-tax salary,
employers match a portion of every dollar you invest; tax-deferred.
6. Explain the risk/reward continuum of investing.
As a general rule, the greater the potential reward of an investment, the greater the risk and visa
versa.
7. How does life insurance fit into your financial plan?
Early in a working lifecycle, life insurance is important to protect the future of dependants. As
one nears retirement, life insurance becomes an integral part of inheritance estate planning.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 264
Unit 9, General Assessments, Test
Name:___________________________________________
Background: Jonnie started working at Escape Travel Agency after finishing high school.
Recently, Jonnie was promoted to office manager and she wants to begin an investment
program. She earns $32,000 annually, isn’t married, and rents an apartment. She is going to
night school in advertising and graduates in 2 ½ years with a bachelor’s degree. Jonnie went to
the library at school to research investing and was soon overwhelmed by the information and
the choices. Returning home in bewilderment, she calls you, her long-time friend, for advice.
Jonnie has a financial workbook that she needs help working through. Please help her work the
problems and answer any questions she may have.
Situation 1. After they both retired, Ed and Samantha Falcon sold their house and land for
$175,000 and rented an apartment. They invested almost all of the proceeds from the sale of
their house in 170, $1000 par value, 7% bonds of Excomunico Limited. The bonds mature in 8
years. The market price of the bonds was 95 ½, with a .5% commission charge.
1. What is the total invested in these bonds?
2. Based on the bonds’ original purchase price, what rate of income could be earned on this
bond investment? (to the nearest percent)
3. If interest is paid on these bonds semiannually, what is the amount of the semiannual
interest payment?
4. If the Falcons hold the bonds until their maturity date, what total amount will they receive
from Excomunico Limited when they redeem their bonds? (No commission will be charged at
redemption.)
5. Would you advise Jonnie to invest in bonds? Why or why not?
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 265
Unit 9, General Assessments, Test
Situation 2. Jacob deposits money from each paycheck into a savings account. When the
account balance reaches $2000, he withdraws $2000 and invests in shares of the Happy
Endings Growth Fund. Jacob has purchased mutual fund shares for the past five years at these
prices:
Year
1
2
3
4
5
Net Asset Value
7.27
7.73
8.35
8.74
9.20
Offer
7.65
8.14
8.79
9.20
9.68
# Shares Bought
261.438
245.700
227.531
217.391
206.612
6. What total number of Happy Endings Growth Fund shares does Jacob own?
7. What average price per share did Jacob pay for the shares he owns?
8. One year after making his last purchase, the Happy Endings Growth Fund has a NAV of
$8.93 and an offer price of $9.40. If Jacob sells all the shares he owns, what are his net
proceeds from the sale? What is his net profit from the ownership of Happy Endings Growth
Fund shares?
9. If Jacob makes no additional fund purchases after the fifth year, at what price would he sell
his shares to double his investment?
10. Jacob practices a more basic form of dollar-cost-averaging. Explain to Jonnie the benefits
of dollar-cost-averaging.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 266
Unit 9, General Assessments, Test
Situation 3. Robert invests $5000 in each of two different stocks. He bought 200 shares of
Snow Peak Outdoor Products at $25 per share, including commission. The Snow Peak stock
pays a quarterly dividend of $0.37 ½ per share. He also bought 400 shares of Drownage
Shipping Company stock at $12.50, including commission. Drownage Shipping paid no
dividend for four years, and then in the fifth year it paid a quarterly dividend of $0.02 per
share.
Robert kept both stocks for five years, and then sold them at these net prices, after
commission: Snow Peak Outdoor Products, $28; Drownage Shipping, $18.
11. What total dividend did Robert receive from both stocks?
12. What profit or loss did Robert make on each sale?
13. What was the total gain or loss from ownership of these stocks?
14. Jonnie likes the idea of investing in stocks, but is unclear about how to manage risk.
Please explain her options when it comes to managing risk.
15. Which of the above investment options would be best for Jonnie if she plans to save
$2200 for a home down payment and $1000 for longer-term goals?
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 267
Unit 9, General Assessments, Test with Answers
1. What is the total invested in these bonds?
170 * $955 * 1.005 = $163,161.75
2. Based on the bonds’ original purchase price, what rate of income could be earned on this
bond investment? (to the nearest percent)
($1000 * .07) / $955 = 7.3%
3. If interest is paid on these bonds semiannually, what is the amount of the semiannual
interest payment?
$170,000 * .07 / 2 = $5,950
4. If the Falcons hold the bonds until their maturity date, what total amount will they receive
from Excomunico Limited when they redeem their bonds? (No commission will be charged at
redemption.)
170 * $1,000 = $ 170,000
5. Would you advise Jonnie to invest in bonds? Why or why not?
Student answers with vary, but should include topics such as: Jonnie is too young to
recommend investing in bonds, bonds are very safe, Jonnie doesn’t need current income.
6. What total number of Happy Endings Growth Fund shares does Jacob own?
261.438 + 245.700 + 227.531 + 217.391 + 206.612 = 1,158.672
7. What average price per share did Jacob pay for the shares he owns?
$10,000 / 1,158.672 = $8.63
8. One year after making his last purchase, the Happy Endings Growth Fund has a NAV of
$8.93 and an offer price of $9.40. If Jacob sells all the shares he owns, what are his net
proceeds from the sale? What is his net profit from the ownership of Happy Endings Growth
Fund shares?
1,158.672 * $8.93 = $10,346.94
Net proceeds from sell
$10,346.94 - $10,000 = $346.94
Net profit from sell
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 268
Unit 9, General Assessments, Test with Answers
9. If Jacob makes no additional fund purchases after the fifth year, at what price would he sell
his shares to double his investment?
$8.63 * 2 = $17.26 N.A.V.
10. Jacob practices a more basic form of dollar-cost-averaging. Explain to Jonnie the benefits
of dollar-cost-averaging.
Student answers will vary, but should include: pay yourself first, buy more shares over time,
when market is high you buy less shares, when market is low you buy more shares, reduces
average share price over time.
11. What total dividend did Robert receive from both stocks?
Snow Peak: 200 * $0.375 * 4 * 5 = $1,500
Drownage: 400 * $0.02
*
4 = $32
12. What profit or loss did Robert make on each sale?
Snow Peak: ($28 - $25) * 200 = $600 Profit
Drownage: ($18 - $12.50) * 400 = $2,200 Profit
13. What was the total gain or loss from ownership of these stocks?
Snow Peak: $1,500 + $600 = $2,100
Profit
Drownage: $32 + $2,200 = $2,232
Profit
14. Jonnie likes the idea of investing in stocks but is unclear about how to manage risk. Please
explain her options when it comes to managing risk.
Student answers will vary, but should include: making investments automatic, dollar cost
averaging, stock mutual funds.
15. Which of the above investment options would be best for Jonnie if she plans to save
$2200 for a home down payment and $1000 for longer-term goals?
Student answers will vary. Invest for a home down payment, with a less than 5-year time
horizon perhaps, save in balanced or less aggressive stock mutual funds. Cannot afford to lose
the money, so keep it fairly safe. Invest for longer-term goals (investments can be more risky),
perhaps in individual stocks or more aggressive stock mutual funds.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 269
Unit 9, Specific Assessments, Activity 1, Calculator Tool
Using the information recorded on your Portfolio Buy Sheet BLM completed for Activity 1 and
a graphing calculator, follow the steps outlined below to input your investments.
To the right is a chart of the example
stock investments used in the calculator
screenshots.
Keep a daily track of what your
investments are doing by calculating the
profit and loss for each of your stocks
from the Portfolio Buy Sheet BLM over
a ten day period.
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
Stock
Name
A
B
C
D
E
F
G
H
I
J
Cost per
Share
14.23
5.03
14.76
7.24
29.65
21.56
47.12
9.49
11.07
3.45
Number of
Shares
450
800
700
301
250
300
125
200
300
600
Total
Investment
6403.50
4024.00
10332.00
2179.24
7412.50
6468.00
5890.00
1898.00
3321.00
2070.00
Enter the cost per share of
each stock in List 1.
Enter the corresponding number of shares bought in List 2, enter the values into
the lists in the same order each time.
In List 3 arrow up and highlight L3
Enter L1 times L2 press ENTER
Clear the home screen
Press 2nd L1 press STO press 2nd LIST highlight OPS highlight B press
ENTER
Press 2nd ALPHA press C press O press S press T press ENTER
Press 2nd L2 press STO press 2nd LIST highlight OPS highlight B press
ENTER
Press 2nd ALPHA press S press H press A press R press E press ENTER
Press 2nd L3 press STO press 2nd LIST highlight OPS highlight B press
ENTER
Press 2nd ALPHA press B press U press Y press ENTER
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 270
Unit 9, Specific Assessments, Activity 1, Calculator Tool
The initial cost per share is now stored in a list called COST, the number of shares
purchased for each stock in a list called SHARE, and the total cost for each stock in a list
called BUY. Do not use the Clear All List feature or it will clear the values saved in these
special lists. Clear the lists by arrowing up and highlighting their names then pressing
CLEAR and arrowing back down.
At the beginning of each class period, calculate your profit or loss for each stock and then
calculate your total profit or loss on all the stocks.
12)
13)
14)
15)
16)
17)
18)
19)
20)
21)
Clear the home screen
Go to list 1 and arrow up to highlight L1
Press 2nd LIST highlight BUY press ENTER press ENTER
Go to list 2 use the up arrow to highlight L2
Press 2nd LIST highlight SHARE press ENTER press ENTER
Enter the closing price for the day of each stock in list 3. Remember they must be
entered in the same order as the original stock.
Go to list 4 use the up arrow to highlight L4
Enter L2 times L3 press ENTER
Go to list 5 use the up arrow to highlight L5
Enter L4 minus L1 press ENTER
List 1:
List 2:
List 3:
List 4:
List 5:
Initial Total Cost per Stock
Shares Bought
Current Value per Share
Current Value
Profit or Loss to Date
22) Save daily profit and loss statements by following the steps 6 and 7 for list 5 and
naming it Daily. Show me your calculator with the value of Daily each day when you
have completed this step.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 271
Unit 9, Specific Assessments, Activity 1, Calculator Tool
23) Calculate the total profit or loss for all stocks at the end of the 10-day activity:
1)
Clear the home screen
2)
Press 2nd LIST highlight MATH highlight 5 press ENTER
3)
Press 2nd L5 press ENTER
4)
Show me your calculator with this value.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 272
Unit 9, Specific Assessments, Activity 8, Definitions
Directions. Match each word with its definition by writing the letter of the correct definition in
the box to the right of the word.
Answer
1. Adverse
selection
2. Beneficiary
3. Cash value
4. Contestability period
5. Indemnify
6. Medical
Information
Bureau
7. Preferred
Risk
8. Rated Policy
9. Second-ToDie Policy
10. Single
premium life
11. Term life
12. Universal
life
13. Variable life
14. Whole life
A. The amount that the owner of a permanent life insurance policy is
entitled to receive if the policy does not remain in force until the insured’s
death.
B. A nonprofit organization established to provide information to insurers
about impairments that applicants have admitted to, or that other insurers
have detected, in connection with previous applications for insurance.
C. A type of life insurance or annuity contract that is purchased by the
payment of one lump sum.
D. This is a substandard policy, which means the physical or moral
lifestyle of the insured is more susceptible to loss. It's the opposite of a
Preferred Risk.
E. A form of life insurance that covers the insured person for a certain
period of time, specified in the policy. It pays a benefit to a designated
beneficiary only when the insured dies within that specified period, which
can be one, five, 10 or even 20 years. Renewable, but premiums increase
with age.
F. A policy that combines protection against premature death with a
savings account that can be invested in stocks, bonds, and money market
mutual funds at the policyholder’s discretion.
G. The tendency of those exposed to a higher risk to seek more insurance
coverage than those at a lower risk. Insurers react either by charging
higher premiums or not insuring at all.
H. The person or legal entity the owner of an insurance policy names to
receive the policy benefit if the event insured against occurs.
I. A flexible premium policy that combines protection against premature
death with a type of savings that typically earns a money market rate of
interest. Death benefits can be changed during the life of the policy within
limits.
J. This is a fancy word that means your beneficiaries are paid the death
benefit to compensate for loss.
K. Permanent life insurance policy that insures two lives under one policy,
usually a husband and wife. Only after both insured parties are deceased
will the death benefit proceeds be paid.
L. The time during which an insurer has the right to cancel or rescind an
insurance policy if the application contained a material misrepresentation.
M. The oldest kind of cash value life insurance that combines protection
against premature death with a savings account. Premiums are fixed and
guaranteed and remain level throughout the policy’s lifetime.
N. This refers to a person whose lifestyle, health, occupation, personal
habits, hobbies, family history, etc., indicate the person should live a long
time. Smokers and race car drivers are not this.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 273
Unit 9, Specific Assessments, Activity 8, Definitions with Answers
Answer
1. Adverse
selection
G
2. Beneficiary
H
3. Cash value
A
4. Contestability period
L
5. Indemnify
J
6. Medical
Information
Bureau
B
7. Preferred
Risk
N
8. Rated Policy
D
9. Second-ToDie Policy
K
10. Single
premium life
C
11. Term life
E
12. Universal
life
F
13. Variable life
I
14. Whole life
M
A. The amount that the owner of a permanent life insurance policy is
entitled to receive if the policy does not remain in force until the insured’s
death.
B. A nonprofit organization established to provide information to insurers
about impairments that applicants have admitted to, or that other insurers
have detected, in connection with previous applications for insurance.
C. A type of life insurance or annuity contract that is purchased by the
payment of one lump sum.
D. This is a substandard policy, which means the physical or moral
lifestyle of the insured is more susceptible to loss. It's the opposite of a
Preferred Risk.
E. A form of life insurance that covers the insured person for a certain
period of time, specified in the policy. It pays a benefit to a designated
beneficiary only when the insured dies within that specified period, which
can be one, five, 10 or even 20 years. Renewable, but premiums increase
with age.
F. A policy that combines protection against premature death with a
savings account that can be invested in stocks, bonds, and money market
mutual funds at the policyholder’s discretion.
G. The tendency of those exposed to a higher risk to seek more insurance
coverage than those at a lower risk. Insurers react either by charging
higher premiums or not insuring at all.
H. The person or legal entity the owner of an insurance policy names to
receive the policy benefit if the event insured against occurs.
I. A flexible premium policy that combines protection against premature
death with a type of savings that typically earns a money market rate of
interest. Death benefits can be changed during the life of the policy within
limits.
J. This is a fancy word that means your beneficiaries are paid the death
benefit to compensate for loss.
K. Permanent life insurance policy that insures two lives under one policy,
usually a husband and wife. Only after both insured parties are deceased
will the death benefit proceeds be paid.
L. The time during which an insurer has the right to cancel or rescind an
insurance policy if the application contained a material misrepresentation.
M. The oldest kind of cash value life insurance that combines protection
against premature death with a savings account. Premiums are fixed and
guaranteed and remain level throughout the policy’s lifetime.
N. This refers to a person whose lifestyle, health, occupation, personal
habits, hobbies, family history, etc., indicate the person should live a long
time. Smokers and race car drivers are not this.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 274
Unit 9, Specific Assessments, Activity 9, Trial Rubric
Health Insurance Mock Trial Rubric
4
Gathering
Information
Organizing
Information
Using
Information
Thinking
Working with
Others
Focus on the
Task
3
2
Research/Group Performance
Gathers a great
deal of
information
with clear
criteria in mind
Information is
organized in a
logical and
thoughtful
manner.
Gathers and
selects
sufficient
information
with criteria in
mind
Is able to
organize
information
Shows insight
in drawing
conclusions
from
information
Draws
conclusions
from the
information
Clearly
demonstrates
divergent
thinking and is
insightful
Almost always
listens to,
shares with,
and supports
the efforts of
others; tries to
keep people
working well
together
Consistently
stays focused
on the task and
what needs to
be done; very
self-directed
Uses some
divergent
thinking in
approach to the
problem
Usually listens
to, shares,
with, and
supports the
efforts of
others; does
not cause
"waves" in the
group
Focuses on the
task and what
needs to be
done most of
the time; other
group members
can count on
this person.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Is generally on
track gathering
information,
but information
is weak in
some areas
Shows some
skill in
approaching
the problem in
a logical
manner
Makes a
concluding
statement that
generalizes
information
Shows little
divergent
thinking
1
Points
Little
information
gathered
Shows little
skill in
approaching
the problem
logically
Draws no
conclusions
and/or
demonstrates
little purpose
for gathering
data
Exhibits no
creative or
divergent
thinking
Often listens
to, shares with,
and supports
the efforts of
others, but
sometimes is
not a good
team member
Rarely listens
to, shares with,
or supports the
efforts of
others; often is
not a good
team player.
Focuses on the
task and what
needs to be
done some of
the time; other
group members
must
sometimes nag,
Rarely focuses
on the task and
what needs to
be done; lets
others do the
work
Page 275
Unit 9, Specific Assessments, Activity 9, Trial Rubric
prod, and
remind to keep
this person ontask
Trial Preparation
Statements
Questions
Statements
are fully
developed,
completely
consistent with
research,
and accurately
portrayed.
Statements
are adequately
developed,
fairly
consistent, and
accurately
portrayed.
Statements
show
a lack of
preparation.
Statements
are not
developed,
and
presentation
shows little or
no
preparation.
Questions
are relevant,
logical,
and clear.
Questions
are properly
formed
and delivered.
Questions
are clear,
logical,
and relevant.
Most of
the time; most
questions are
properly
formed.
Questions
lack logic.
Most
questions are
poorly
formed.
Questions
are irrelevant
or
unclear.
Statements and
questions show
an
understanding
of
how evidence
supports or
opposes
the claim.
Statements and
questions show
some
understanding
of how
evidence
supports or
opposes
the claim.
Statements and
questions are
inconsistent
with
evidence
supporting
or opposing
the
claim.
Statements and
questions show
sophisticated
understanding
of
Depth of
how evidence
Understanding
relates to and
supports or
opposes
the claim.
Trial Behavior
Voice
Easily
understood and
consistently
uses an
appropriate
rate,
volume, and
intonation
Understood
most of
the time and
uses
an appropriate
rate,
volume, and
intonation most
of
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Understood,
but
uses an
inappropriate
rate,
volume, or
intonation that
distracts from
what
Not
easily
understood
Page 276
Unit 9, Specific Assessments, Activity 9, Trial Rubric
Authenticity
Courtroom
Decorum
the time.
is being said.
Excellent use
of body and
facial
expression;
words
and gestures
match.
Adequate body
and facial
expression
Lacks
realism; body
and facial
expressions do
not
match actions
Unconvincing;
body and
facial
expressions
are not
used
Has
appropriate
interactions
with
judge and
opposing
attorneys
Interactions
with other
members of
the trial are
appropriate
most of the
time.
Unsure
of how to
interact
with other
members
of the trial
Distracted,
demonstrates
inappropriate
behavior
Routinely
provides useful
ideas. A
definite leader
who
contributes a
lot of effort.
Work reflects
this student's
best efforts.
Usually
provides useful
ideas. A strong
group member
who tries hard!
Overall Effort
Contributions
Pride
Work reflects a
strong effort
from this
student.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Sometimes
provides useful
ideas. A
satisfactory
group member
who does what
is required.
Work reflects
some effort
from this
student.
Rarely
provides
useful ideas.
May refuse to
participate.
Work reflects
very little
effort on the
part of this
student.
Page 277
Unit 10, Activity 2, Cash Flow Record
Task: Complete a personal spending record for two weeks.
Cash Flow Record Week 1
Week of:
Name:
Income
Expenses
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
TOTALS:
Income minus expenses:
This total should be positive; the extra money you intake weekly can go toward meetings your financial goals.
The first step toward managing your money is to keep accurate records of
how and where money is spent.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 278
Unit 10, Activity 2, Cash Flow Record
Cash Flow Record Week 2
Week of:
Name:
Income
Expenses
Sunday
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
TOTALS:
Income minus expenses:
This total should be positive; the extra money you intake weekly can go toward meetings your financial goals.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 279
Unit 10, Activity 3, Monthly Budget Sheet
Task: Use the Cash Flow Record BLM prepared for the first week of this unit to
extrapolate dollar amounts to prepare a monthly budget sheet.
Monthly Budget Sheet
Budget for:
Month of:
Budgeted Amount
Actual Amount
Income:
Work (net pay)
$
$
Gifts/Allowance
$
$
Other
$
$
$
$
$
$
Car Payment
$
$
Auto Insurance
$
$
Other
$
$
Variable Expenses
Food
$
$
Gas
$
$
Clothing
$
$
Entertainment
$
$
Special Occasions
$
$
Other
$
$
$
$
$
$
$
$
Total Income
Fixed Expenses:
Savings for goals
Total Fixed Expenses
Total Variable Expenses
Total Expenses
Balance:
(Income minus Expenses)
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 280
Unit 10, General Assessments, End-Of-Course Test
Name:__________________________________________________
Introduction: Tracy and Albert Rushworth now rent an apartment for $670 a month.
While renting, they saved $17,000 to use for a down payment on a home and other
expenses. The Rushworths have been looking at houses, and found one priced at $85,000
that meets their needs. Closing costs on the house would be $2,500. Before signing a
contract to buy the home, the Rushworths went to several lenders for home mortgage
information. They found three lenders in the area that offer mortgages at these terms:
Lender A requires a 20% down payment for a 14.25%, 20-year mortgage loan.
For these terms, the monthly mortgage payment will be $857.97.
Lender B offers a 14.50%, 25-year mortgage loan with a minimum 16% down
payment. At this rate, the monthly mortgage payment will be $886.91.
Lender C offers the longest mortgage term, 30 years. To get that term, the
borrower must make a minimum down payment of 14% and pay a rate of
14.875%. At these terms, the monthly mortgage payment will be $917.01.
Because they will no longer live near their work, the Rushworths will have to buy a
second car. They have shopped for a new car, and found one they like that sells for
$12,600. With a minimum down payment required of 10%, the monthly payments would
be $401.49 for a loan of three years and $324.30 for a four-year loan. It is possible to
lease the car they want instead of buying. The monthly lease payments would be $289.50,
with no money down.
The estimated annual expenses of operating the car they want are as follows: gasoline,
650 gallons at $3.05; insurance, $420; maintenance, $230; license fees, $45. At the time
of purchase, only one-fourth of the annual insurance premium must be paid along with
the license fee. If the car is purchased, the interest for the first year would be $1,638 on a
three-year loan and $1,711 on a four-year loan. If the car is purchased, the depreciation
expense the first year will be 22% of the purchase price and the interest lost on money
invested in the car will be $101.
The Rushworths’ combined gross income is $45,000 a year. If they buy the house, they
will have these expenses: property taxes, $2,090; insurance, $320; maintenance and
repairs, $1,100; lost interest on the down payment at 8%; depreciation at a rate of 2% a
year. The first-year mortgage interest they would pay varies among lenders as follows:
Lender A, $9,649; Lender B, $10,333; Lender C, $10, 864.
By paying property taxes and mortgage interest, the Rushworths would have these tax
benefits, depending on where they got their mortgage: Lender A, $3,290; Lender B,
$3,480; Lender C, $3,630.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 281
Unit 10, General Assessments, End-Of-Course Test
Complete the following tables to summarize the data that the Rushworths gathered.
1.
Money Needed at Time of Home and Car Purchase
(assuming minimum down payment is made)
Lender A
Lender B
Lender C
Home Down Payment
Closing Costs
Subtotal
Car Down Payment
Car Insurance
(¼th of annual premium)
License Fee
Total Amount Needed
2.
Cost of Owning Home for First Year
Lender A
Lender B
Lender C
Property Taxes
Insurance
Maintenance &
Repairs
Lost Interest
Depreciation
Mortgage Interest
Total Gross Cost
Less Tax Savings
Net Cost of Owning
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 282
Unit 10, General Assessments, End-Of-Course Test
3.
Total Interest Paid Over Term of Original Mortgage Loan
(to nearest dollar)
Lender A
Lender B
Lender C
Amount
4.
Car Operating Cost
Gasoline
Insurance
Maintenance
License Fees
Total Operating Costs
5.
Cost of Leasing and Operating Car for First Year
Annual Lease Cost
Total Operating Cost
Total Cost
6.
Cost of Owning and Operating Car for First Year
Three-year Loan
Four-year Loan
Operating Costs
Depreciation
Interest Paid
Interest Lost
Total Cost
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 283
Unit 10, General Assessments, End-Of-Course Test
7.
Total Annual Payment for Mortgage and Car Loan
Mortgage Obtained From:
Total Annual Mortgage
Payment Plus Annual
Payment on a 3-year Car
Loan
Total Annual Mortgage
Payment Plus Annual
Payment on a 4-year Car
Loan
Lender A
Lender B
Lender C
Complete the Decision Table below by writing a “yes” or “no” answer using the data
from the tables you completed or other facts provided. Then, answer the questions that
follow.
8.
Decision Table: Do the Rushworths have enough money saved to buy a
house and a car or buy a house and lease a car?
Can they get a mortgage
from…
And buy a car?
And lease a car?
Lender A
Lender B
Lender C
9. In order to be approved for a mortgage loan by any lender, the purchase price of the
house must be less than 2.5 times the buyer’s annual income. Do the Rushworths meet
this requirement?
10. Compare the lowest cost of owning the home with the cost of renting. Which is less
expensive, and by how much?
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 284
Unit 10, General Assessments, End-Of-Course Test
11. Compare the cost of buying and leasing a car. Which will be less expensive for the
Rushworths during the first year?
12. For each lender, give the total amount of money that is needed if both the home and
car are purchased.
Lender A
Lender B
Lender C
13. From which lender(s) can the Rushworths get a mortgage loan and still afford to buy
a car after making all the required down payments and not spending more than they
saved?
14. Assume the Rushworths do not want to spend more than one-third of their annual
gross income on mortgage and car payments. Using the decision table and other data,
identify the combination(s) that will come closest to this goal of limiting spending.
Explain your answer.
15. If you were making this home and car buying decision for the Rushworths, describe
what you would do and why.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 285
Unit 10, General Assessments, End-Of-Course Test with Answers
Complete the following tables to summarize the data that the Rushworths gathered.
1.
Money Needed at Time of Home and Car Purchase
(assuming minimum down payment is made)
Lender A
Lender B
Lender C
Home Down Payment
$17,000
$13,600
$11,900
Closing Costs
$2,500
$2,500
$2,500
Subtotal
$19,500
$16,100
$14,400
Car Down Payment
$1,260
$1,260
$1,260
$105
$105
$105
$45
$45
$45
$20,910
$17,510
$15,810
Car Insurance
(¼th of annual premium)
License Fee
Total Amount Needed
2.
Cost of Owning Home for First Year
Lender A
Lender B
Lender C
$2,090
$2,090
$2,090
$320
$320
$320
Maintenance &
Repairs
$1,100
$1,100
$1,100
Lost Interest
$1,360
$1,088
$952
Depreciation
$1,700
$1,700
$1,700
Mortgage Interest
$9,649
$10,333
$10,864
Total Gross Cost
$16,219
$16,631
$17,026
Less Tax Savings
$3,290
$3,480
$3,630
Net Cost of Owning
$12,929
$13,151
$13,396
Property Taxes
Insurance
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 286
Unit 10, General Assessments, End-Of-Course Test with Answers
3.
Total Interest Paid Over Term of Original Mortgage Loan
(to nearest dollar)
Amount
Lender A
Lender B
Lender C
$137,913
$194,673
$257,024
4.
Car Operating Cost
Gasoline
$1,982.50
Insurance
$420
Maintenance
$230
License Fees
$45
$2677.50
Total Operating Costs
5.
Cost of Leasing and Operating Car for First Year
$3,474
Annual Lease Cost
Total Operating Cost
$2,677.50
Total Cost
$6,151.50
6.
Cost of Owning and Operating Car for First Year
Three-year Loan
Four-year Loan
$2,677.50
$2,677.50
Depreciation
$2,772
$2,772
Interest Paid
$1,638
$1,711
Interest Lost
$101
$101
$7,188.50
$7,261.50
Operating Costs
Total Cost
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 287
Unit 10, General Assessments, End-Of-Course Test with Answers
7.
Total Annual Payment for Mortgage and Car Loan
Mortgage Obtained From:
Total Annual Mortgage
Payment Plus Annual
Payment on a 3-year Car
Loan
Total Annual Mortgage
Payment Plus Annual
Payment on a 4-year Car
Loan
Lender A
$15,113.52
$14,187.24
Lender B
$15,460.80
$14,534.52
Lender C
$15,822
$14,895.72
Complete the Decision Table below by writing a “yes” or “no” answer using the data
from the tables you completed or other facts provided. Then, answer the questions that
follow.
8.
Decision Table: Do the Rushworths have enough money saved to buy a
house and a car or buy a house and lease a car?
Can they get a mortgage
from…
And buy a car?
And lease a car?
Lender A
No
No
Lender B
No
Yes
Lender C
Yes
Yes
9. In order to be approved for a mortgage loan by any lender, the purchase price of the
house must be less than 2.5 times the buyer’s annual income. Do the Rushworths meet
this requirement?
Yes
10. Compare the lowest cost of owning the home with the cost of renting. Which is less
expensive, and by how much?
Renting is lower by $5,729.40
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 288
Unit 10, General Assessments, End-Of-Course Test with Answers
11. Compare the cost of buying and leasing a car. Which will be less expensive for the
Rushworths during the first year?
Leasing is lower by $1,677.60
12. For each lender, give the total amount of money that is needed if both the home and
car are purchased.
Lender A
Lender B
Lender C
$20,910
$17,510
$15,810
13. From which lender(s) can the Rushworths get a mortgage loan and still afford to buy
a car after making all the required down payments and not spending more than they
saved?
Lender C
14. Assume the Rushworths do not want to spend more than one-third of their annual
gross income on mortgage and car payments. Using the decision table and other data,
identify the combination(s) that will come closest to this goal of limiting spending.
Explain your answer.
Answers will vary.
Any lender with 4-year car loan.
Any lender with leasing the car.
15. If you were making this home and car buying decision for the Rushworths, describe
what you would do and why.
Answers will vary.
Cheapest is Lender B and leasing the car.
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 289
Unit 10, Specific Assessments, Activity 2, Cash Flow Rubric
Cash Flow Record
Name:
Teacher:
Criteria
4
Assignment
Completeness
Accuracy
Demonstrated
Knowledge
Requirements
Legibility
3
Responses for
Missing no more
each day and
than 2 responses.
each category.
All items are
correct.
Most items are
correct.
Points
2
Missing 3 to 5
responses.
Many items are
correct.
1
Less than 1/2 of
responses
completed.
Less than 1/2 of
all items are
correct.
Shows
Shows complete
substantial
Response shows Response shows a
understanding of
understanding of
some
complete lack of
the financial and
the financial and understanding of understanding for
mathematical
mathematical
the process.
the process.
process.
process.
Goes beyond the
requirements of
Meets the
Does not meet the
the activity, i.e. requirements of
requirements of
provides receipts
the activity.
the activity.
for all expenses.
Legible
Marginally
Writing is not
Writing is not
handwriting; easy
legible
legible in places.
legible.
to read.
handwriting.
Total Points
Teacher Comments:
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Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 290
Unit 10, Specific Assessments, Activity 4, Financial Plan Rubric
Financial Planning Portfolio
CATEGORY
3
Binder
Divided into
required sections.
Dividers headed
correctly and
decorated following
theme of section.
Many sections
missing.
Headings not
used correctly.
Dividers not
decorated.
Financial Goals
All six required
items are present
and complete.
Goals are realistic,
include measurable
terms, have a time
frame, include
action to be taken.
Education timeline
is complete and
reflects an
uncommon depth of
understanding.
More than 3
items missing or
incomplete.
Goals are not
realistic. Do not
include
measurable
terms, time
frame or action
to be taken.
Education
timeline is
missing or
incomplete.
Reflects a lack
of understanding
of future goals.
Earnings
Potential
All six required
items are present
and complete.
Chosen career and
income is clearly
stated. Calculations
correct.
More than 3
items missing or
incomplete.
Chosen career
and income are
not stated.
Many errors in
calculations.
Automobile
All five required
items are present
and complete.
Taken as a whole,
reflects an
uncommon depth of
understanding.
More than 3
items missing or
incomplete.
Taken as a
whole, reflects a
lack of
understanding.
Housing
All nine required
items are present
and complete.
Taken as a whole,
reflects an
uncommon depth of
understanding.
More than 5
items missing or
incomplete.
Taken as a
whole, reflects a
lack of
understanding.
2
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
1
0
Points
Page 291
Unit 10, Specific Assessments, Activity 4, Financial Plan Rubric
Insurance
All four required
items are present
and complete. All
categories are
covered: Life, Auto
& Health.
More than 2
items missing or
incomplete.
Category
missing.
Investments
All 14 required
items are present
and complete.
Work demonstrates
superior knowledge
of topic.
More than 6
items missing or
incomplete.
Work
demonstrates
lack of
knowledge of
topic.
Banking
All four required
items are present
and complete. All
calculations correct.
More than 2
items missing or
incomplete. Few
calculations
correct.
Credit
All six required
items are present
and complete.
Work demonstrates
superior knowledge
of credit.
More than 3
items missing or
incomplete.
Taken as a
whole, reflects a
lack of
understanding of
credit.
Organization
Neat, organized
information. Easy
to read and follow.
Outstanding
document for future
reference.
Unorganized and
illegible. Not
easy to read or to
follow.
Understanding
of document’s
future purpose
not evident.
Total Points
Rubric adapted from a template found at: http://rubistar.4teachers.org/index.php
Blackline Masters, Financial Math
Louisiana Comprehensive Curriculum, Revised 2008
Page 292