626 CHAPTER 10 Consumer Mathematics $ All Exercises in this Section are related to financial literacy. Warm Up Exercises In Exercises 1– 6, fill in the blanks with an appropriate word, phrase, or symbol(s). 1. A loan on which you pay a fixed amount of money for a set number of payments is called a fixed ___________ loan. Installment 2. A loan on which you make variable payments each month is called a(n) ___________ installment loan. Open-end 3. The true rate of interest charged for a loan is called the ___________ percentage rate. Annual 4. The total amount of money the borrower must pay for borrowing the money is called the ___________ charge. Finance 5. The sum of all the monthly payments and the down payment, if any, is called the total ___________ price. Installment 6. The period between when a purchase is made and when the credit card company begins charging interest is called the ___________ period. Grace Practice the Skills In Exercises 7–10, for each installment loan, determine a) the down payment amount, b) the amount financed, and c) the monthly payment (see Example 1). SECTION 10.4 Exercises Purchase Price Down Payment Finance Charge Number of Payments 7. $15,000 5% $1061.63 24 8. $23,000 15% $2181.78 36 9. $35,000 20% $4183.20 48 10. $58,500 25% $8252.89 60 7. a) $750, b) $14,250, c) $637.98 8. a) $3450, b) $19,550, c) $603.66 9. a) $7000, b) $28,000, c) $670.48 10. a) $14,625, b) $43,875, c) $868.80 In Exercises 11–14, for each installment loan, use Table 10.2 to determine a) the finance charge and b) the monthly payment (see Example 2). Amount Financed Annual Percentage Rate Number of Monthly Payments 11. $6000 5.5% 12 12. $7500 6% 30 13. $20,200 7.5% 48 14. $30,500 9% 60 11. a) $180.25, b) $515.02 12. a) $595.26, b) $269.84 13. a) $3243.86, b) $488.41 14. a) $7487.78, b) $633.13 In Exercises 15–18, for each installment loan, use the installment payment formula to determine the monthly payment (see Example 3). Amount Financed (P) Annual Percentage Rate (r) Number Payments per Year (n) Time in Years (t) 15. $ 825 6% 12 2 $36.56 16. $ 2200 9% 12 3 $69.96 17. $15,000 6.5% 12 4 $355.72 18. $27,000 9.5% 12 5 $567.05 Problem Solving 19. Truck Trade-In When Artemis purchased a new truck that sells for $39,000, she traded in her old truck and received $14,500 that she used as a down payment. She financed the balance with a 60-month fixed installment loan with an APR of 6.5%. a) Determine the amount financed. $24,500 b) Determine the finance charge. $4262.24 c) Determine the monthly payment. $479.37 20. Car Trade-In Zane traded in his old car for $1500 and used the money as a down payment on a new car selling for $23,900. He financed the balance with a 48-month fixed installment loan with an APR of 5.5%. a) Determine the amount financed. $22,400 b) Determine the finance charge. $2605.37 c) Determine the monthly payment. $520.95 21. Business Loan Kara is opening up a new daycare business in her home. She needs $6500 to purchase toys and a backyard playset. Kara makes a 10% down payment and finances the balance with a 48-month fixed installment loan with an APR of 4.5%. a) Determine Kara’s finance charge. $553.22 b) Determine Kara’s monthly payment. $133.40 Jonathan Weiss/Shutterstock
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