Chapter 8 Loans Lesson 8.1 Single-Payment Loans Mathematics A single-payment loan is a loan that you repay with one payment after a specified period of time, or term. Ordinary interest is calculated by basing the term on a 360-day year. Exact interest is calculated by basing the term on a 365-day year. The maturity value of the loan is the total amount you repay. Ordinary Interest = Principal x Rate x Time 360 Exact Interest = Principal x Rate x Time 365 Maturity Value = Principal + Interest Owed 1. Terry Bergolt's bank granted him a single-payment loan of $4,400 at an interest rate of 6% exact interest. The term of the loan is 172 days. a. What is the exact interest? b. What is the maturity value of the loan? 2. Jane Dimas obtained a single-payment loan of $420 to pay a Chapter 8 repair bill. She agreed to repay the loan in 90 days at an interest rate of 6.25% ordinary interest. a. What is the ordinary interest? b. What is the maturity value of the loan? 3. Ruth Brown wants to borrow $2,600 for 90 days to pay her real estate tax. State Savings and Loan charges 7.25% ordinary interest while Security Bank charges 7.5% exact interest. a. What is the maturity value of each loan? b. Where should they borrow the money? 4. You have a chance to lend $6,500 at 5.25% interest for 95 days. a. If you charge ordinary interest, how much will you earn? b. If you charge exact interest, how much will you earn? c. If you were borrowing the money, would you prefer to pay ordinary interest or exact interest? Why? 5. ALGEBRA Harry Church borrowed $17,500.00 at 6.5% exact interest. He had to pay back a maturity value of $17,873.97 to pay off the loan. What was the term of the loan