Question 1

Janet took out a loan of $50,000 from Bank of America at 8% on March 19, 2012, which is due on July 8, 2012. Using exact interest, the amount of Janet's interest cost is:

Accepted Answer

A) $5,018.44 
B) $2,561.44 
C) $5,261.44 
D) $5,216.44 
E) None of these 
A) $5,018.44 
B) $2,561.44 
C) $5,261.44 
D) $5,216.44 
E) None of these

Question 2

Jill Ley took out a loan for $60,000 to pay for her child's education. The loan would be repaid at the end of eight years in one payment with interest of 6%. The total amount Jill has to pay back at the end of the loan is:

Accepted Answer

A) $88,008 
B) $80,800 
C) $88,800 
D) $28,800 
E) None of these 
A) $88,008 
B) $80,800 
C) $88,800 
D) $28,800 
E) None of these

Question 3

Jim Murphy borrowed $30,000 on a 120-day 14% note. Jim paid $5,000 toward the note on day 95. On day 105 he paid an additional $6,000. Using the U.S. Rule, Jim's adjusted balance after the first payment is:

Accepted Answer

A) $25,000 
B) $28,891.67 
C) $1,108.33 
D) $26,108.33 
E) None of these 
A) $25,000 
B) $28,891.67 
C) $1,108.33 
D) $26,108.33 
E) None of these

Question 4

A $40,000 loan at 4% dated June 10 is due to be paid on October 11. The amount of interest is (assume ordinary interest):

Accepted Answer

A) $503.00 
B) $2,500.00 
C) $546.67 
D) $105.33 
E) None of these 
A) $503.00 
B) $2,500.00 
C) $546.67 
D) $105.33 
E) None of these

Question 5

Interest is the cost of borrowing.

Accepted Answer

A) True 
 B)False

Question 6

Interest on $5,255 at 12% for 30 days (use ordinary interest) is:

Accepted Answer

A) $52.55 
B) $55.25 
C) $5.26 
D) $5.25 
E) None of these 
A) $52.55 
B) $55.25 
C) $5.26 
D) $5.25 
E) None of these

Question 7

Joe Flynn visits his local bank to see how long it will take for $1,200 to amount to $2,100 at a simple interest rate of 7%. The time is (round time in years to nearest tenth):

Accepted Answer

A) 9.2 years 
B) 11.1 years 
C) 10.7 years 
D) 17.1 years 
E) None of these 
A) 9.2 years 
B) 11.1 years 
C) 10.7 years 
D) 17.1 years 
E) None of these

Question 8

In calculating interest in the U.S. Rule from the last partial payment, the interest is subtracted from the adjusted balance.

Accepted Answer

A) True 
 B)False

Question 9

The amount a bank charges for the use of money is called interest.

Accepted Answer

A) True 
 B)False

Question 10

Banks and other financial institutions sometimes calculate simple interest based on:

Accepted Answer

A) Exact interest method 
B) Using 30 days for each month 
C) Using 366 days in the year 
D) Bankers rule, ordinary interest 
E) None of these 
A) Exact interest method 
B) Using 30 days for each month 
C) Using 366 days in the year 
D) Bankers rule, ordinary interest 
E) None of these

Question 11

Interest of $1,632 with principal of $16,000 for 306 days (ordinary interest) results in a rate of:

Accepted Answer

A) 10% 
B) 12% 
C) 12 1/2% 
D) 13% 
E) None of these 
A) 10% 
B) 12% 
C) 12 1/2% 
D) 13% 
E) None of these

Question 12

The number of days between May 20 and November 22 is:

Accepted Answer

A) 197 
B) 206 
C) 186 
D) 183 
E) None of these 
A) 197 
B) 206 
C) 186 
D) 183 
E) None of these

Question 13

With interest of $1,832.00 and a principal of $16,000 for 206 days, using the ordinary interest method, the rate is:

Accepted Answer

A) 20% 
B) 12% 
C) 2% 
D) 10% 
E) None of these 
A) 20% 
B) 12% 
C) 2% 
D) 10% 
E) None of these

Question 14

Simple interest usually represents a loan of:

Accepted Answer

A) One month or less 
B) One year or less 
C) Two years or less 
D) Six months or less 
E) None of these 
A) One month or less 
B) One year or less 
C) Two years or less 
D) Six months or less 
E) None of these

Question 15

Matty Kaminsky owns a new Volvo. His June monthly interest is $400. The rate is 8 ½%. Matty's principal balance at the beginning of June is (use 360 days):

Accepted Answer

A) $65,740.58 
B) $64,470.58 
C) $65,704.58 
D) $56,470.58 
E) None of these 
A) $65,740.58 
B) $64,470.58 
C) $65,704.58 
D) $56,470.58 
E) None of these

Question 16

To convert time in days, it is necessary to multiply the time in years times 360 or 365.

Accepted Answer

A) True 
 B)False

Question 17

Ordinary interest is never used by banks.

Accepted Answer

A) True 
 B)False

Question 18

July 10 to March 15 is 119 days.

Accepted Answer

A) True 
 B)False

Question 19

Federal Reserve banks as well as the federal government like to calculate simple interest based on:

Accepted Answer

A) Exact interest, ordinary interest 
B) Using 30 days in each month 
C) Using 31 days in each month 
D) Exact interest 
E) None of these 
A) Exact interest, ordinary interest 
B) Using 30 days in each month 
C) Using 31 days in each month 
D) Exact interest 
E) None of these

Question 20

Interest = principal × rate.

Accepted Answer

A) True 
 B)False

Exam 10: Simple Interest

Janet took out a loan of $50,000 from Bank of America at 8% on March 19, 2012, which is due on July 8, 2012. Using exact interest, the amount of Janet's interest cost is:

Jill Ley took out a loan for $60,000 to pay for her child's education. The loan would be repaid at the end of eight years in one payment with interest of 6%. The total amount Jill has to pay back at the end of the loan is:

Jim Murphy borrowed $30,000 on a 120-day 14% note. Jim paid $5,000 toward the note on day 95. On day 105 he paid an additional $6,000. Using the U.S. Rule, Jim's adjusted balance after the first payment is:

A $40,000 loan at 4% dated June 10 is due to be paid on October 11. The amount of interest is (assume ordinary interest):

Interest is the cost of borrowing.

Interest on $5,255 at 12% for 30 days (use ordinary interest) is:

Joe Flynn visits his local bank to see how long it will take for $1,200 to amount to $2,100 at a simple interest rate of 7%. The time is (round time in years to nearest tenth):

In calculating interest in the U.S. Rule from the last partial payment, the interest is subtracted from the adjusted balance.

The amount a bank charges for the use of money is called interest.

Banks and other financial institutions sometimes calculate simple interest based on:

Interest of $1,632 with principal of $16,000 for 306 days (ordinary interest) results in a rate of:

The number of days between May 20 and November 22 is:

With interest of $1,832.00 and a principal of $16,000 for 206 days, using the ordinary interest method, the rate is:

Simple interest usually represents a loan of:

Matty Kaminsky owns a new Volvo. His June monthly interest is $400. The rate is 8 ½%. Matty's principal balance at the beginning of June is (use 360 days):

To convert time in days, it is necessary to multiply the time in years times 360 or 365.

Ordinary interest is never used by banks.

July 10 to March 15 is 119 days.

Federal Reserve banks as well as the federal government like to calculate simple interest based on:

Interest = principal × rate.

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