Exam 10: Simple Interest

On May 17, Jane took out a loan for $33,000 at 6% to open her law practice office. The loan will mature the following year on January 16. Using the ordinary interest method, what is the maturity value due on January 16?

Sue Gastineau borrowed $17,000 from Regions Bank at a rate of 5.5% to open her lingerie shop. The date of the loan was March 5. Sue hoped to repay the loan on September 19. Assuming the loan is based on ordinary interest, Sue will pay back how much in interest expense?

The amount charged for the use of a bank's money is called:

Janet Home went to Citizen Bank. She borrowed $7,000 at a rate of 8%. The date of the loan was September 20. Janet hoped to repay the loan on January 20. Assuming the loan is based on ordinary interest, Janet will pay back how much interest on January 20?

In the U.S. Rule, the partial payment first covers the interest and the remainder reduces the principal.

Which of the following is not true of the U.S. Rule?

Joan Roe borrowed $85,000 at a rate of 11 3/4%. The date of the loan was July 8. Joan is to repay the loan on Sept. 14. Assuming the loan is based on exact interest, the interest Joan will pay on Sept. 14 is:

The U.S. Rule:

The U.S. Rule is a method that allows the borrower to receive proper interest credit when a debt is paid off in more than one payment before the maturity date.

The federal government likes to use ordinary interest.

Given interest of $11,900 at 6% for 50 days (ordinary interest), one can calculate the principal as:

Sandra Gloy borrowed $5,000 on a 120-day 5% note. Sandra paid $500 toward the note on day 40. On day 90 she paid an additional $500. Using the U.S. Rule, her adjusted balance after the first payment is:

Interest is equal to:

At maturity, using the U.S. Rule, the interest calculated from the last partial payment is:

Principal is equal to rate divided by interest times time.

Simple interest loans are usually more than one year.

The time of a loan could be expressed in months, years, or days.

A note dated Dec. 13 and due July 5 runs for exactly:

In the U.S. Rule, the first step is to calculate interest on the total life of the loan.

A note dated August 18 and due on March 9 runs for exactly: