Section 11.2 Personal Loans and Simple...
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Section 11.2 notes 2.notebook February 06, 2017 Section 11.2 Personal Loans and Simple Interest Principle of a loan Security or collateral Cosigner Interest Simple Interest Formula Interest = principle X rate X time i = prt time = days, months, or years time will always be expressed in the same period as the rate To compute interest, each month has 30 days and a year has 12 months or 360 days Money the lender will give you. What the bank can sell of yours to pay off the loan car, bank accounts, home, stocks and bonds... Another person signs the loan with you with collateral if you default on the loan. The money you pay the bank for the borrowing money.
Transcript of Section 11.2 Personal Loans and Simple...
Section 11.2 notes 2.notebook February 06, 2017
Section 11.2 Personal Loans and Simple Interest
Principle of a loan
Security or collateral
Cosigner
Interest
Simple Interest Formula
Interest = principle X rate X time
i = prt
time = days, months, or years
time will always be expressed in the same period as the rate
To compute interest, each month has 30 days and a year has 12 months or 360 days
Money the lender will give you.
What the bank can sell of yours to pay off the loan car, bank accounts, home, stocks and bonds...
Another person signs the loan with you with collateral if you default on the loan.
The money you pay the bank for the borrowing money.
Section 11.2 notes 2.notebook February 06, 2017
Section 11.2 notes 2.notebook February 06, 2017
Section 11.2 notes 2.notebook February 06, 2017
Discount Note The interest is paid at the time the borrower receives the loan. The interest is paid first. A Federal Reserve Treasury Bill is a discount note issued by the U.S. government.
Section 11.2 notes 2.notebook February 06, 2017
#29 Julie Jansen borrowed $3650 from her bank for 8 months. The bank discounted the loan at 7.5%.a) How much interest did Julie pay the bank for the use of the money?b) How much did she receive from the bank?c) What was the actual rate of interest she paid?
Section 11.2 notes 2.notebook February 06, 2017
The United States Rule is used when a partial payment is made on a loan.
It states that if a partial payment is made on a loan, interest is computed from the first day of the loan to the date of the partial payment. The partial payment is used to pay the interest first, then the rest of the payment is used to reduce the principle. The same steps are repeated if another partial payment is made before the due date of the loan.
The Banker's Rule is used to calculate simple interest when applying the United States rule. The Banker's rule considers a year to have 360 days, and any fractional part of a year is the exact number of days of the loan.
Section 11.2 notes 2.notebook February 06, 2017
Section 11.2 notes 2.notebook February 06, 2017
Section 11.2 notes 2.notebook February 06, 2017
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Example 7 Using the Banker's rule
Determine the simple interest that will be paid on a $300 loan at an interest rate of 5% for the period March 3 to May 3 using the Banker's rule.
Section 11.2 notes 2.notebook February 06, 2017
Example 8 Using the United States Rule
Cathy takes out a loan for 120 days on November 1, 2006 for $400 at an interest rate of 12.5%. Cathy uses some birthday gift money to make a partial payment of $150 on January 5, 2007. She makes a second partial payment of $100 on February 2, 2007.
a) Determine the due date of the loan.
b) Determine the interest and the amount credited to the principle on January 5.
c) Determine the interest and the amount credited to the principal on February 2.
d) Determine the amount that Cathy must pay on the due date.
Section 11.2 notes 2.notebook February 06, 2017
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Section 11.2 notes 2.notebook February 06, 2017
Do #56
Section 11.2 notes 2.notebook February 06, 2017
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