456 Chapter 10 Consumer Mathematics
B. The Rule of 78 (Optional)
Use the Rule of 78 to determine interest/principle splits and payoff amounts.
- Calculate 1 2 3 ... 400.
- Calculate the sum of the whole numbers from 1 up to (and including) 837.
- Suppose that you buy the refrigerator under the installment plan described in Exercise 1. How much of your fi rst
payment counts toward interest? How much would count toward paying off the principal? - For the lawnmower purchase described in Exercise 2, how much interest will I pay with my fi rst payment? How much
total interest will I pay in the fi rst year? - For the installment plan described in Exercise 3, determine:
a. The total interest paid in the fi rst 6 months.
b. The amount required to pay off this loan after the fi rst 6 monthly payments.- Suppose that Julian (from Exercise 4) decides to pay off the remaining balance he owes after making 12 monthly
payments. How much will he need to do this? - What is the sum of the whole numbers starting with 7 and ending with 295? (Hint: First fi nd the sum of the whole
numbers from 1 to 295.) - Dario made a purchase with a 16-month installment plan. His payments are $50 a month, and the initial balance was
$600. How much total interest will he pay over the course of this plan? How much interest does he pay with his fi rst
seven payments? After his seventh payment, what would the payoff amount for this installment plan be?
C. APR Calculations
- Calculate the APR for the installment plan from Exercise 3, using:
a. A spreadsheet amortization table
b. The approximation formula- Calculate the APR for Julian’s sound system purchase from Exercise 4, using:
a. A spreadsheet amortization table
b. The approximation formula- For the refrigerator installment plan from Exercise 1, fi nd the APR by using:
a. A spreadsheet amortization table