determining the apr pp. 300-303 8-6 section. click to edit master text styles second level third...

Determining the APR pp. 300-3038-6SECTIONSECTION

• Click to edit Master text styles

• Second level

• Third level

• Fourth level

• Fifth level

2

SECTION

Copyright © Glencoe/McGraw-Hill

8-6

Section ObjectiveSection ObjectiveUse a table to find:

• annual percentage rate of a loan


• Second level

• Third level

• Fourth level

• Fifth level

3

SECTION


8-6

Finance Charge per $100 =

$100 × (Finance Charge ÷ Amount Financed)

Formula Formula


• Second level

• Third level

• Fourth level

• Fifth level

4

SECTION


8-6

Given Chen’s situation, do you think it’s a good idea to take out a loan for a vacation? Should he wait and save up money to afford the trip?

A Picture Perfect Loan p. 300A Picture Perfect Loan p. 300


• Second level

• Third level

• Fourth level

• Fifth level

5

SECTION


8-6

Paul Norris obtained an installment loan of $1,500.00 to pay for a computer. The finance charge is $146.25. He agreed to repay the loan in 18 monthly payments.

What is the annual percentage rate?

Example 1Example 1


• Second level

• Third level

• Fourth level

• Fifth level

6

SECTION


8-6

Find the finance charge per $100.


$100 × ($146.25 ÷ $1,500.00)

$100 × 0.0975 = $9.75

Example 1 Answer: Example 1 Answer: Step 1Step 1


• Second level

• Third level

• Fourth level

• Fifth level

7

SECTION


8-6

Find the APR. (Refer to the Annual Percentage Rate for Monthly Payment Plans table on page 300.)

In the row for 18 payments, find the number closest to $9.75. It is $9.77. Read the APR at the top of the column.

APR is 12.00%.



• Second level

• Third level

• Fourth level

• Fifth level

8

SECTION


8-6

A 54-inch HDTV is for sale for $1,899.92 cash or $177.83 per month for 12 months.

What is the APR?

Example 2Example 2


• Second level

• Third level

• Fourth level

• Fifth level

9

SECTION


8-6

Find the finance charge.

Total Payback – Amount Financed

(12 × $177.83) – $1,899.92

$2,133.96 – $1,899.92 = $234.04



• Second level

• Third level

• Fourth level

• Fifth level

10

SECTION


8-6

Find the finance charge per $100.


$100.00 × ($234.04 ÷ $1,899.92)

$100.00 × 0.12318 = $12.32



• Second level

• Third level

• Fourth level

• Fifth level

11

SECTION


8-6

Find the APR. (Refer to the Annual Percentage Rate for Monthly Payment Plans table on pages 794-795 of your textbook.)

In the row of 12 payments, find the number closest to $12.32. It is $12.31. Read the APR at the top of the column.

APR is 22.00.



• Second level

• Third level

• Fourth level

• Fifth level

12

SECTION


8-6

Brenda Richards obtained an installment loan for $2,125. She agreed to repay the loan in 12 monthly payments of $189.

What is the APR?

Practice 1Practice 1


• Second level

• Third level

• Fourth level

• Fifth level

13

SECTION


8-6

12.25 percent

Practice 1 AnswerPractice 1 Answer


• Second level

• Third level

• Fourth level

• Fifth level

14

SECTION


8-6

Natalie Rubino is planning to borrow $2,800 for a new furnace. Bell Finance will loan her the money for 24 months at a finance charge of $428. TRC Finance will loan her the money for a finance charge of $418.

What is the APR on each loan?

Practice 2Practice 2


• Second level

• Third level

• Fourth level

• Fifth level

15

SECTION


8-6

Bell Finance: 14 percent

TRC Finance: 13.75 percent

Practice 2 AnswerPractice 2 Answer

Determining the APR8-6END OF SECTIONEND OF SECTION

determining the apr pp. 300-303 8-6 section. click to edit master text styles second level third...

Documents

finance charge

annual percentage rate

monthly payments

installment loan

monthly payment plans

picture perfect loan

number closest

loansection objectiveclick