Calculate deferred payments.
Example: You want to buy a sofa that cost $899. Company A will let you pay $100 down and then pay the remaining amount over 3 years at 22% interest. Company B will not make you pay a down payment and they will defer payments for one year. However, you will accrue interest at a rate of 20 % interest during that first year. Starting the second year you will have to pay the new amount for 2 years at a rate of 26 % interest. Which deal is better and why? Calculate the total amount paid for both deals. Example: An electronics company advertises that you don't have to pay anything for 2 years. If you bought a big screen TV for $2999 on January 1st what would your balance be two years later if you haven't made any payments assuming an interest rate of 23.99%? What would your monthly payments be to pay the TV off in 2 years? What did the TV really cost you?
Subject Area: X-Mathematics (former standards - 2008)
Body of Knowledge: Financial Literacy
Idea: Level 2: Basic Application of Skills & Concepts
Standard: Loans and Financing
- Become familiar with and describe the advantages and disadvantages of short-term purchases, long-term purchases, and mortgages.
Date Adopted or Revised: 09/07
Date of Last Rating: 06/07
Status: State Board Approved - Archived