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Computing Down Payment Gross Balance and Current Increased Balance

This document provides information and examples for calculating down payments, gross balances, and current increased balances for financed purchases. It defines down payment as the initial payment made when purchasing something with financing for the remaining balance. It then provides an example of calculating a 20% down payment on a car worth PHP 732,000. It defines gross balance as the remaining amount to be financed after subtracting the down payment from the purchase price. Finally, it defines current increased balance as the total amount owed including any interest or penalties, and provides an example calculating a balance with a 20.25% interest rate. It concludes with two word problems applying these concepts.

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Dione Degamo
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2K views

Computing Down Payment Gross Balance and Current Increased Balance

This document provides information and examples for calculating down payments, gross balances, and current increased balances for financed purchases. It defines down payment as the initial payment made when purchasing something with financing for the remaining balance. It then provides an example of calculating a 20% down payment on a car worth PHP 732,000. It defines gross balance as the remaining amount to be financed after subtracting the down payment from the purchase price. Finally, it defines current increased balance as the total amount owed including any interest or penalties, and provides an example calculating a balance with a 20.25% interest rate. It concludes with two word problems applying these concepts.

Uploaded by

Dione Degamo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Computing Down

Payment, Gross
Balance and Current
Increased Balance
Down payment
is the first payment that one makes when one buys
something with an agreement to pay the rest later.

Consider the problem.


Sunshine is a sales agent. She was able to sell a brand new
car worth Php 732,000 this month. Her buyer paid a 20%
down payment of the net price. The balance will be paid
through bank financing.
Down Payment = Unit Price x Down Payment Rate
= Php 732,000 x 0.20
= Php146,400
Gross balance or book balance
refers to the total amount of money a bank has on
deposit before adjusting for uncleared checks or deposits,
as well as reserve requirements.
That is, the book balance is a measure of what the
bank has on hand before adding or subtracting regulatory
obligations and items that will soon appear on its books.
This is the term used by banks to describe the
amount of money available before any adjustment is made
for deposits in transit, checks that have not been cleared,
and reserve requirements and interest received from “float
funds”.
Gross balance or book balance

Gross balance (Amount to Be Financed through


Bank)
Gross balance = Unit Price – Down Payment
= Php 732,000 – Php 146,400
= Php 585,600
Current increased balance
refers to the total amount you have to pay that includes
penalties or interest incurred by unpaid balance from a loan or
payment you are supposed to have made but was not able to do so
on time.
How much is the current increased balance if the bank charges an
interest rate of 20.25%?
Current Increased Balance = Gross Balance (1 + Interest Rate)
= Php 585,600 (1 + .2025)
= Php 585,600 (1.2025)
= Php 704,184
Example
1. Edwin was able to sell a condominium worth Php
2,350,000 which would be financed by a bank or
through PAG-IBIG. He gave his buyer a discount of
Php 50,000. He told his buyer that the required down
payment was 20% of the net price.
a. How much was the down payment paid by the
buyer?
b. How much was the gross balance or the
amount to be financed by the bank or PAG-IBIG?
c. How much is the current increased balance if
the bank charges an interest rate of 15%?
2. Dave purchased a town house unit whose total
contract price is Php1,020,300. He paid Php10,000
as reservation fee and a down payment of 25% of
the unit price which is to be deducted from the
total contract price. The balance will be paid
through a housing loan from a bank.
a. How much was the gross balance or the
amount to be financed by the bank?
b. How much is the current increased balance
after if the bank charges an interest rate of
10.25%?

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