3.2 Loans - B

Multiple Choice

What is the total amount of the monthly payments for a $5,300, 4-year loan with an APR of 3%?

• $5,629.92

• $2,000.25

• $1,062.24

• $100.50

Financial AlgebraSecond Edition
Tax Code Update

Robert Gerver | Richard Sgroi
© 2021 Cengage Learning, Inc.

Slide 2

3-2 Loans

Learning Goals

The students will be able to:
• Read monthly payments from a table.
• Compute monthly payments using a formula.
• Compute interest on loans.

Financial Algebra Second Edition

Slide 5

Example 4:
Mark bought a new car. The total amount he needs to borrow is $28,716. He plans on taking out a 4-year loan at an APR of 3.12%. What is the monthly payment?       Monthly Payment Formula








where M = monthly payment

        P = principal

             r = interest rate

             t = # of years

Financial Algebra Second Edition

Slide 5

Example 4:
Mark bought a new car. The total amount he needs to borrow is $28,716. He plans on taking out a 4-year loan at an APR of 3.12%. What is the monthly payment?       Monthly Payment Formula








where M = monthly payment

         P = principal

             r = interest rate

             t = # of years

​Substitute P = 28,716
r = 0.0312
t = 4

​The monthly payment is $637.13

Multiple Choice

Find the monthly payment for a $1,000, 1-year loan at an APR of 2.5%.

• $84.47

• $6,685.06

• $8,447.00

• $66.85

Financial Algebra Second Edition

Slide 5

Example 5:
Natasha needs to borrow $400 until her next paycheck to purchase a wedding gift. She goes to Friendly Fred’s Loan Store. Friendly Fred lends her the $400 for 3 weeks, at which time Natasha pays it back in
full. There is no collateral required, so the APR is relatively high. Fred charges her $70 interest for the 3 weeks. What is the APR for this loan to the nearest 10%?

Financial Algebra Second Edition

Slide 5

Example 5: continue

​APR= 304.1666667

Multiple Choice

Harrison’s Loan Stars loaned Nicole $900 that she needed for an unexpected car repair. She must repay the loan in 30 days. The interest is $100. What is the APR for this loan, to the nearest percent?

• 115%

• 75%

• 100%

• 135%

Financial Algebra Second Edition

Slide 8

Classwork:

Textbook

Lesson 3.2

Practice exercises (Applications)
# 2, 6, 10, 12, 14.



HW: Study for quiz - lessons 3.1 & 3.2