11.2 Simple Interest

• The simple interest formula: i=prt
  • p : principal, the amount of money borrowed
  • r : the annual interest rate.
  • t : the number of years the money is borrowed.
  • i : interest, the money the borrower pays to use the principal
• A : the total amount of the loan, A=p+i
  • The borrower must pay A.
• Do problems 11,12,13,19, and 26 page 665
• Discount Notes: prepaid interest.
• Do problem 28 page 666

11.4 Fixed Installment Loans

• Installment loans require regular payments of principal and interest.
• Look at table 11.2 on page 680
• Do Problems 9,13, 15 page 688
• Unearned Interest U = nPv/(100+v)
  • u = unearned interest
  • P = monthly payment
  • n = months remaining
  • v = lookup n, % on table
• Payoff = (n+1)*P - u
• Do problem 17