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Chapter 4 – Loans and Credit Cards 4.1 – Promissory Notes Interest = Principle x Rate x __________ Exact Interest – Time is # days / ___________ Ordinary Interest – Time is # days / __________ Rate of Interest = ________________ / Principal 4.2 – Discounted Promissory Notes Principal x ______________________ = Bank Discount Proceeds = Principal - ____________________________ True Rate of Interest = Interest / _________________________ 4.3 – Interest Tables Number of $100’s = _____________________/100 Interest = Decimal from Interest Table x ______________________________ Days Between: January: _____ May: _____ September: _____ February: _____ June: _____ October: _____ March: ______ July: _____ November: _____ April: _____ August: _____ December: _____ Find the number of days left in the first month, add the number of days in any other month, and add the number of days used in the last month. 4.4 – Installment Loans Total of Monthly Payments = Monthly payment x _______________________ Finance Charge = Total of Monthly Payments - _________________________ Remainder to pay = Installment Price - _______________________ Monthly payment = Remainder to pay / _______________________ Monthly Interest Rate = Annual Interest Rate / ___________ Interest for the month = ________________ x Monthly Interest Rate Amount applied to principal = _____________________ - Interest for the month New Balance = Principal - _______________________ 4.5 Early Loan Repayments Describe the rule of 78 One-Month rules of 78 Finance Charge = Principal x Rate x ____________ One-Month Simple Interest Charge = Principal x Rate x _____________ Unearned finance charge = Total finance charge x _______________________ Earned finance charge = ________________ - Unearned finance charge Early Loan Repayments: Total of remaining payments = _________________ x Number of remaining payments Unearned finance charge = Total finance charge x _______________________ Amount needed to repay the loan = Total of remaining payments - ________________________ 4.6 – Annual Percentage Rates Finance Charge per $100 of Amount Financed = (__________________/Amount Financed) x $100 4.7 – Credit Card Costs Correct Balance = Statement balance - ____________________________________ Total Finance charge for year = Monthly Finance Charge x _______________ Balance transfer fee = Amount of money being transferred x ____________________ Total Cost of Credit Card for the year = ______________________ + _________________________+ membership fee 4.8 – Credit Card Finance Charges Previous Balance Method Finance Charge = Previous Balance x _________________________________ New Balance = Previous Balance + (Finance Charge + New Purchases + Fees) – (_______________ + Credits) Adjusted Balance Method Adjusted Balance = Previous Balance - _____________________ - Credits Adjusted Balance Finance charge = Adjusted balance x _______________________ Adjusted Balance Method New Balance = Adjusted Balance + ___________________+ ____________________ Average Daily Balance Method Sum of Daily Balance = Beginning Balance – (Payments + Credits) + (________________ + Fees) Average Daily Balance = Sum of Daily Balances / ______________________________________ Finance Charge = Average Daily Balance x _________________________________ New Balance = Beginning Balance – (Payments + Credits) + (________________+New Purchases + Fees) Cash Advances Interest on Cash Advance = Cash advance x # of days x ________________________ Finance Charge = Interest + ______________ Payoff Amount = _________________________ + Finance Charge