The document discusses various concepts related to loans and interest calculations. It provides examples of calculating simple interest using the formula I=PRT, where I is interest, P is principal, R is interest rate, and T is time. It also discusses using repayment tables to compare loan options and shows a home loan repayment table to calculate monthly payments over different periods of time and interest rates. Finally, it provides an example of tracking loan repayments over multiple months when interest is calculated monthly on the remaining principal.

1. CREDIT

2. Loans$$$ ….Repay with Interest
+
Borrow $2000
Repay $100 per month for 2 years $100 x 24
How Much do you Pay??
$2000 Borrowed $2400 Repaid
Interest Paid = $400

3. Simple Interest & Flat Rate Loans
Use the Formula I = PRN
Amount of
The Interest Rate
Simple Interest
per annum (year)
The Principal $$ The Number of
Borrowed Years to PayBack

4. How Much Interest ?…you Borrow $2000 (P)
…Interest Rate 10% pa (R)
…Repay in 2 Years (N)
Use the Formula : I=
PRN
Substitute the Values : I = 2000 x 0.10 x 2
Calculate: I = $400 Borrowed + Interest
=$2400
*How Much Would You Have to Repay?
Total$ to pay / 24
*What Would be the Monthly Repayments? =$2400/24 mths
=$100 per month

5. Using I = PRN to find the Interest Rate
Cash Price = $400
OR
On Terms: $40 Deposit
& $20 per month for 2 years
How Much Do I Pay?? PAY $40 + $20 x 24 mths = $520
How Much Interest?? Interest Paid = Extra over the Cash Price = $120
Use I = PRN
What % Rate Is That?? 120 = 360 x R x 2 R=16.7%
Balance =$400-$40=$360 R=0.167

6. Using A Repayments Table
Do You Take the Terms at the Shop, OR
Is it Cheaper to Get a Loan Elsewhere ,
and Pay Cash?….YOU CHOOSE!
Cash Price $600
Bank Loan for $600
On Terms :
How Much would you have to pay ?
Pay $32 per month for 2 years
Check the Bank’s Table
Amount I Year 2 Years
interest interest
How Much Cheaper pa
$300 $27.50 $15.00
Would the Bank Loan Be??
$600 $55.00 $30.00 pa
Pay$660 to Bank
$800 $73.33 $40.00 pa
or $768 to Shop (Terms)

7. Home Loans Repayment Table
Large Loans to buy a House
use a Different Type of Interest, REDUCIBLE
The Table gives the Monthly Repayment for EACH $1000 Borrowed
Home Loans Repayment Table
Select the Interest Rate %
te
Select the Years to Repay
Using Monthly Repayments
The Monthly Repayments
ents per $1000
interest % 10 20 30 years r r^n
5 10.61 6.60 5.37 1.00 1.00 1.00 1.65 2.71 4.47
6 11.10 7.16 6.00 1.01 1.01 1.01 1.82 3.31 6.02
7 11.61 7.75 6.65 1.01 1.01 1.01 2.01 4.04 8.12
8 12.13 8.36 7.34 1.01 1.01 1.01 2.22 4.93 10.94
You Borrow $800 000….What are the Monthly Repayments?
If the Interest Rate is 6% p.a. and you want 20 years to repay
You Pay $7.16 per month , for each $1000
For $800000 that’s $7.16 x 800 = $5728 p.m.
That’s a Total of $5728 x 240 = $1374720

8. INTEREST…reducible or flat??
Home Loans use REDUCIBLE Interest.
The Interest Reduces as the Amount owed gets Smaller
You Borrow $3000.
You Pay Back $1000 each Year + Interest.
Over 3 Years, How Much is Repaid??
FLAT INTEREST REDUCIBLE INTEREST
YR 1 YR 2 YR 3 YR 1 YR 2 YR 3
OWE $3000 $2000 $1000 OWE $3000 $2000 $1000
INT $3000 $300 $300 INT $3000 $200 $100
PAY $1300 $1300 $1300 PAY $1300 $1200 $1100

9. Do Your Own !!
Home Loan Repayment Table
Borrowed $20000.
Interest Rate 1% per month.
Repay $500 per month.
Each Month find …
the Interest on what’s owed…
the Total Amount Owed with the Interest added…
then what’s left Owing after the monthly Repayment
*The Interest is calculated on how much is still Owed

10. 4.Then Repayment is subtracted($500)
3.The Interest added to Principal
2.Interest at end of month 1%
1.At the start you Owe
Month Principal Interest P + I Left
Find the 1 $20000 $200
Owing
$20200 $19700
Amounts for 2 $19700 $197 $19897 $19397
Month 3 3
At the end of each month, the Amount Left Owing
is Carried Over to the Start of the Next Month