# Thinking Mathematically by Robert Blitzer Thinking Mathematically Consumer

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```					  Thinking
Mathematically
Consumer Mathematics and Financial
Management
The Vocabulary of Fixed Installment
Loans
Installment loan – a loan that you pay off
with weekly or monthly payments.
Fixed installment loan – fixed periodic
payment.
The Vocabulary of Fixed Installment
Loans
The amount financed is what the consumer
borrows:
Amount financed = Cash price - Down payment
The Vocabulary of Fixed Installment
Loans
The total installment price is the sum of all
monthly payments plus the down payment:
Total installment price =
Total of monthly payments + Down payment
The Vocabulary of Fixed Installment
Loans
The finance charge is the interest on the
installment loan:
Finance charge =
Total installment price - cash price
Steps in Using an APR Table
1. Compute the finance charge per \$100 financed:
[Finance charge / (Amount financed/ \$100)
2. Look in the row corresponding to the number of
payments to be made, and find the entry closest
to the value in step 1.
3. Find the APR a the top of the column in which
the entry from step 2 is found. (This is the APR
rounded to the nearest ½%)
Example – Using an APR table
Exercise Set 8.5 #5, 11
A computer is paid for with 12 monthly installments.
The finance charge per \$100 is \$6.90. What is the
APR for this loan?
Furniture is purchased for a cash price of \$17,500.
The purchase is financed by paying \$500 down, and
\$360.55 per month for 60 months.
•   Determine the amount financed.
•   Determine the total installment price.
•   Determine the finance charge.
•   What is the APR for this loan?
Thinking
Mathematically
Consumer Mathematics and Financial
Management