Click here to Return to Student Page

Step 7: Loan Calculation Student Name__________________

Print out a copy of this worksheet. Fill out and turn in this worksheet and the worksheet from Step 6 to instructor when finished.

Click on link Loan Calculator to access the following site (http://www.c2commerce.com/fxcalculators/FBL/installment.asp)

You will now link to a financial calculator and determine monthly payments and total cost of financing the item.  You will decide what amount of monthly payment is desirable, then adjust the interest rate and the term in years until that monthly payment is achieved (within $20.)  Total cost of financing (total interest), monthly payment, loan rate and length of loan will be recorded on the worksheet.

1. Click on Monthly Payment

2. Enter the Amount of your Luxury Item in the blank beside Loan Amount

3. Type in an interest rate of 18 percent (common annual percentage rate for credit cards or revolving credit)

4. Type in a Term in Years of 2

5. Payments per year are 12

6. Click on Calculate

7. What is the monthly Period Payment it calculated?_____________________________

8. Scroll down and find the total interest you would pay____________________________

9. Add the Amount of your Item and the total Interest. What will this item cost you if you finance it for this length of time?______________

10. Change the Term in Years to 1

11. What is the monthly Period Payment it calculated?_____________________________

12. Scroll down and find the total interest you would pay____________________________

13. Add the Amount of your Item and the total Interest. What will this item cost you if you finance it for this length of time?______________

14. Change the Term in Years to 3

15. What is the monthly Period Payment it calculated?_____________________________

16. Scroll down and find the total interest you would pay___________________________

17. Add the Amount of your Item and the total Interest. What will this item cost you if you finance it for this length of time?______________

18. What monthly payment will you choose? _____________

19. Why?________________________

20. Enter the payment on your budget on the line for credit card payments.

21. Save the changes to the budget.

22. Give this worksheet to your instructor.