In this chapter students will be able to: Calculate the amount financed, finance charge, and deferred payment, calculate the estimated APR by table lookup, calculate the monthly payment by formula and by table lookup, calculate the finance charges on revolving charge credit card accounts. | INSTALLMENT BUYING Chapter Fourteen Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 1 1. Calculate the amount financed, finance charge, and deferred payment. 2. Calculate the estimated APR by table lookup . 3. Calculate the monthly payment by formula and by table lookup. LU 14-1: Cost of Installment Buying Learning unit objectives LU 14-2: Revolving Charge Credit Cards 1. Calculate the finance charges on revolving charge credit card accounts. 2 14- Finance charge (FC) – the interest charge. FC = Total of all -- Amount monthly payments financed Installment loan – A loan paid off in a series of equal periodic payments. Payments include interest and principal. Amount financed (AF) – the amount actually borrowed. AF = Cash price -- Down payment Deferred payment price (DPP) – the total of all monthly payments plus the down payment. DPP = Total of all + Down monthly payments payment Cost of Installment Buying 3 Cost of Installment Buying Mary . | INSTALLMENT BUYING Chapter Fourteen Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 1 1. Calculate the amount financed, finance charge, and deferred payment. 2. Calculate the estimated APR by table lookup . 3. Calculate the monthly payment by formula and by table lookup. LU 14-1: Cost of Installment Buying Learning unit objectives LU 14-2: Revolving Charge Credit Cards 1. Calculate the finance charges on revolving charge credit card accounts. 2 14- Finance charge (FC) – the interest charge. FC = Total of all -- Amount monthly payments financed Installment loan – A loan paid off in a series of equal periodic payments. Payments include interest and principal. Amount financed (AF) – the amount actually borrowed. AF = Cash price -- Down payment Deferred payment price (DPP) – the total of all monthly payments plus the down payment. DPP = Total of all + Down monthly payments payment Cost of Installment Buying 3 Cost of Installment Buying Mary Wilson would like to buy a boat that cost $9,345. If she puts down $300 she can finance the balance for 60 months at (monthly payment = $). Calculate the amount financed, finance charge, and deferred payment price. Amount financed = Cash price -- Down payment Finance charge = Total of all -- Amount monthly payments financed Deferred payment Price = Total of all + Down monthly payments payments $9,045 = $9,345 -- $300 $2, = $11, -- $9,045 ($ x 60) $11, = $11, + $300 4 Calculating APR by Table Step 1. Divide the finance charge by amount financed and multiply by $100 to get the table lookup factor. Step 2. Go to APR Table . At the left side of the table are listed the number of payments that will be made. Step 3. When you find the number of payments you are looking for, move to the right and look for the two numbers closest to the table lookup number. This will indicate the APR. 5 Annual Percentage Rate (APR) Calculating APR rate by table Finance .
