Objective 5.01 Handouts

8/6/2019 Objective 5.01 Handouts

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6200/6600 Principles of Business and Finance Summer 2010 Page 335

Name: ______________________ Class: _______ Date: _______

Main Types of Credit OrganizerDirections: Summarize the main types of credit and include key term(s) listed at thebottom of this sheet. Give examples when possible in the spaces provided.

Type Details Examples

Key Terms: trade credit, loan credit, sales credit, finance charge, down payment,installment loan, promissory note, collateral, cosigner

Credit


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Name: ______________________ Class: _______ Date: _______

Credit: Primary or Promoter Product ActivityDirections: Complete the chart using advertisements that include credit offers tobusinesses, the government, and individuals.

Advertisement Type of credit offered Is credit the primaryproduct or is it used topromote the sale ofgoods and services?

1www.staples.com

Credit Cards:Business and personal

Used to promote the saleof goods or services

2

3

4

5

6

7

8

9


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Name: ______________________ Class: _______ Date: _______

Advantages and Disadvantages of Using Credit ActivityDirections: Determine the advantage or disadvantage of using credit for each

example in the spaces provided.

1. Rufus, the owner of A-1 Auto Mechanic, paid his business bills on timeduring the three years of operation.

____________________________________________________________________________________________________________________________

2. Rufus noticed seven purchases for products not used by the businesspossibly made by one of his employees on the business credit card.

____________________________________________________________________________________________________________________________

3. For filing taxes, Rufus has been able to use only credit card statements fromhis Business American Express to track purchases.

____________________________________________________________________________________________________________________________

4. Toni charged about $6,000 worth of clothes and accessories over severalshopping sprees. Toni can barely make the minimum payments of about$400 each month.

____________________________________________________________________________________________________________________________

5. Rufus submitted a year-end summary for his business credit card withouthaving to go through three years of receipts.

____________________________________________________________________________________________________________________________

6. Rufus issued a credit card to an employee to purchase supplies.____________________________________________________________________________________________________________________________

7. Rufus received free software by frequently using his business credit card.____________________________________________________________________________________________________________________________

8. Rufus suspects a customer stole several customer files from his desk.____________________________________________________________________________________________________________________________


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Name: ______________________ Class: _______ Date: _______

Directions: In your own words, respond to the questions in the spaces provided.Cost of Credit Organizer

1. What factors are included to compute interest?________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. How is simple interest calculated?________________________________________________________________________________________________________________________________________________________________________________________________

3. How is time determined for a loan for each of the provided lengths?

Years________________________________________________________________________________________________________________________________

Months________________________________________________________________________________________________________________________________Days

________________________________________________________________________________________________________________________________

4. How is a maturity date calculated?________________________________________________________________________________________________________________________________________________________________________________________________

5. How is a decreasing loan payment calculated?________________________________________________________________________________________________________________________________________________________________________________________________

6. What is disclosed in APR?________________________________________________________________________________________________________________________________________________________________________________________________


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Name: ______________________ Class: _______ Date: _______

Maturity Date ActivityDirections: Calculate the maturity dates in the spaces provided.

Date loan made Time length of loan Maturity Date

1. January 15 10 days January 25

2. August 10 30 days

3. May 5 45 days

4. October 24 90 days

5. March 3 4 months

6. January 12 6 months


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Name: ______________________ Class: _______ Date: _______

Converting Time and Percents ActivityDirections: Convert the provided time and percents into decimals in the spacesprovided.

Time:1. 1 month = ________

2. 3 months = ________

3. 6 months = ________

4. 9 months = ________

5. 1 year 6 months = ________

6. 2 years 3 months = ________

7. 10 years 4 months = ________

8. 15 years= ________

Percent:9. .4% = ________

10. 8% = ________

11. 10% = ________

12. 15% = ________

13. 17.5% = ________

14. 18% = ________

15. 22.5% = ________

16. 25% = ________


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Name________________________________ Class__________ Date___________

Simple Interest ActivityDirections: Calculate the cost of credit and record it in the interest column. Use thesimple interest rate formula: I=P * R * T.

Principal Interest Rate Time Interest

$150 4 3 months $18

$150 4 6 months

$300 10 6 months

$300 10 9 months

$1,000 8 12 months

$1,000 8 18 months

$10,000 18 1 year

$10,000 18 2 years and 3 months

$180,000 5 15 years

$180,000 5 30 years

Directions: Provide responses to the provided questions.

1. What is the relationship between the time length of a loan and interest?____________________________________________________________________________________________________________________________________________2. Why are time and percents converted into decimals?

____________________________________________________________________________________________________________________________________________3. How should debtors compare credit costs among options?

____________________________________________________________________________________________________________________________________________4. Why is it important for debtors to compare credit cost among options?

____________________________________________________________________________________________________________________________________________


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Name: ______________________ Class: _______ Date: _______

Installment Interest ActivityDirections: Calculate the total payment for a loan in the spaces provided.

Loan: Decreasing Loan Payment Schedule$1,500 Car loan, 12% interest rate, monthly payments are $100 plus interest

Unpaid Balance * Interest rate = Interest (Remember: The amount of interest is basedon the portion of the year.)Interest + Loan Repayment = Total Payment

Months Unpaid Balance Interest LoanRepayment

Total Payment

1 $1,500 $15 $100 $115

23456789101112

131415Totals

Directions: Provide responses to the provided questions.

1. Is this purchase worth the cost? Why or Why not?________________________________________________________________________________________________________________________________________________________________________________________________________

2. What economic and personal factors can affect interest rates?_________________________________________________________________________________________________________________________________________________________________________________________________________


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6200/6600Principles

ofBusinessandFinance

Summer2010

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48

Name____________

____________________

Cla

ss__________

Date_______

____

ChoosingtheRight

CreditCardActivity

Directions:Compare

thecostofcreditforcreditca

rdsinthetableprovided.

Terms

CARD1

Business/Government

CARD2

Bu

siness/Government

CARD3

Individual

C

ARD4

In

dividual

Nameandtypeof

card

Annualfee

AnnualPercentage

Rate(APR)

OtherAPRs

Otherfees

Rankcardsas1or2,

1beingthemostcost

efficientcardand2theleast.

Explainranking

results.

Rank

cardsas1or2,

1beingthemostcost

efficie

ntcardand2theleast.Explainranking

results.


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Name________________________________ Class__________ Date___________

Main Factors for Granting Credit and Credit Documents OrganizerDirections: Describe the listed factors examined for granting credit and creditdocuments in the spaces provided. Include key term(s) listed at the bottom of the sheet.

Section A

Key term(s): credit bureau

Factors for Granting Credit

Three Cs of credit Credit application

Documentation of creditdataInformation provided by

credit bureaus


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Main Factors for Granting Credit and Credit Documents Organizer Continued

Section BDirections: Describe the listed credit documents.

Credit Contract Statement of Credit


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Name________________________________ Class__________ Date___________

Three Cs of Credit Scoring Guide

Advanced, Proficient, and Progressing levels are based on whether tasks criteria

are met.Advanced:All three of the proficient level criteria are met PLUS student provided visual

aid for each C.

Character Visual Aid

Capacity Visual Aid

Capital Visual Aid

Proficient:All nine tasks are accomplished. Student defined and provided twoexamples of actions for each C. This is the core of what must be achieved.

Character

Action 1

Action 2

Capacity

Action 1

Action 2

Capital

Action 1

Action 2

Progressing: Six of nine proficient level tasks are accomplished. Student defined andprovided one example for each C.

Character

Action

CapacityAction

Capital

Action


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CREDIT APPLICATION FOR A BUSINESS ACCOUNT

BUSINESS CONTACT INFORMATIONTitle:Company name:

Phone: Fax: E-mail:Registered company address:City: State: ZIP Code:Date business commenced:Sole proprietorship: Partnership: Corporation: Other:

BUSINESS AND CREDIT INFORMATIONPrimary business address:City: State: ZIP Code:How long at current address?Telephone: Fax: E-mail:Bank name:Bank address: Phone:City: State: ZIP Code:Type of account Account number SavingsCheckingOther

BUSINESS/TRADE REFERENCESCompany name:Address:City: State: ZIP Code:Phone: Fax: E-mail:Type of account:Company name:Address:

City: State: ZIP Code:Phone: Fax: E-mail:Type of account:Company name:Address:City: State: ZIP Code:Phone: Fax: E-mail:Type of account:

AGREEMENT

1. All invoices are to be paid 30 days from the date of the invoice.

2. Claims arising from invoices must be made within seven working days.

3. By submitting this application, you authorize Contoso, Ltd. to make inquiries into the

banking and business/trade references that you have supplied.SIGNATURES

Title:Date:

Title:Date:


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Name: ______________________ Class: _______ Date: _______

Credit Application Content ActivityDirections: Respond to the questions in the spaces provided.

What information on the individual and business credit applications is similar?

What information on the individual and business credit applications is different?

State in your own words the possible reasons for differences in individual and businesscredit applications.

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________________________


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Group doing the gallery walk ___________ Class__________ Date__________

Credit Contract ActivityDirections: Use the checklist to check specified content of a credit contract.

Checklist

__________ Credit Contract includes the listed items. This is the core of whatmust be achieved.

Finance charges-How much? _____

Cost of services-How much _____

Add-on feature to buy other items.

Statement indicating finance charges will be reduced if contract is paid in fullbefore ending date.

Statement indicating a copy of contract will be provided.

Comments about contract content:

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Group doing the gallery walk ___________ Class__________ Date__________

Credit Contract Activity

Directions: Use the checklist to check specified content of a credit contract.

Checklist

__________ Credit Contract includes the listed elements. This is the core of whatmust be achieved.

Finance charges-How much? _____

Cost of services-How much _____

Add-on feature to buy other items.

Statement indicating finance charges will be reduced if contract is paid in fullbefore ending date.

Statement indicating a copy of contract will be provided.

Comments about contract content:


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Name: ______________________ Class: _______ Date: _______

Statement of Account ActivityDirections: Use Figure 18-6 on page 467 in Intro to Business, 6e, Thomson South-Western textbook to answer questions in the spaces provided.

1. What is the previous balance?

2. Did the customer make a payment on this account the previous month? Why?

3. How many purchases were made this billing period? What is the total?

4. What is the minimum amount due on this statement of account?

Notes from discussion: ________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________


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Name:___________

___________

Class:_______

Date:_______

CreditRegulationsandCreditAssistance

Directions:Summariz

etheregulationsorcreditas

sistanceoptionsprovided.

Activity

CreditApplicationR

egulations

Truth-in-LendingLaw

EqualCreditOpportu

nityAct

CreditUseRegulations

FairCreditBillingAct

FairCreditReporting

Act


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6200/6600Principles


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CreditRegulationsandCreditAssistanceActivitycontinued

ConsumerCreditReporting

ReformA

ct

FairDebtCollections

Act

CreditCardAccounta

bility,

Responsibility,andD

isclosure

Act


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CreditRegulationsandCreditAssistanceActivitycontinued

CreditAssistance

Debtrepaymentplan

CreditCounselor

Bankruptcy

Objective 5.01 Handouts

Documents

Transcript of Objective 5.01 Handouts