Exam 8: Simple Interest Applications

A note for $665 dated March 22, 2014, with interest at 7.34% per annum, is issued for 128 days. Determine a)the legal due date; b)the interest period (in days); c)the amount of interest; d)the maturity value.

A note for $800 dated June 4, 2010, with interest at 8.25% p.a., is issued for 10 days. Determine a)the legal due date; b)the interest period (in days); c)the amount of interest; d)the maturity value.

You lend a friend $1300 on May 11th. The demand loan rate is 10.12%. Your friend makes a partial payment on May 26th for $550 and on June 19th for $675. You demand full repayment of the outstanding balance on July 17th. What is the final payment amount to? Use the declining balance method.

FIGURE 8.1 Basic Design of a Loan Repayment Schedule Use the design shown in Figure 8.1 to construct a complete repayment schedule including the totaling of the Amount Paid, Interest Paid, and Principal Repaid columns for the following loan. On April 22, Tim borrowed $2900.00 from Keewatin Credit Union at 6.5% per annum calculated on the daily balance. He gave the Credit Union four cheques for $535.00 dated the 15th of each of the next four months starting May 15 and a cheque dated October 15 for the remaining balance to cover payment of interest and repayment of principal.

Zahid purchased a large-screen TV at a local store in December, that had advertised, "No payment for 6 months." Amount to be paid after 6 months is $1495 plus HST (13%)plus an administration fee of $79. If money is worth 2.5%, what is the actual cost of the TV to Zahid on the day of the purchase?

Determine the missing information for the following line of credit. Harold has a line of credit secured by the equity in his home. The limit on his line of credit is $85 000. Transactions for the period May 1 to September 30 are shown below. Harold owed $45 967.06 on his line of credit on May 1. Note: "-" indicates a negative balance. Overdraft interest is 28.8% p.a. The line of credit interest is variable. It was 6.15% on May 1, 6.50% effective June 20, and 6.55% effective September 10. a)Calculate the interest payments on May 31, June 30, July 31, August 31, and September 30. b)What is the account balance on September 30?

Meridian credit union approved a $500 000 line of credit on a demand basis to Hard Steel to finance the import of raw material. Interest at the rate of prime plus 1% is charged to Hard Steel's chequing account at the bank on the 1st of each month. The initial advance was $300 000 on 1st of June, 2016, when the prime rate stood at 3%. There were further advances of $40 000 on July 13 and $100 000 on July 28. Payments of $70 000 each were applied against the principal on August 15 and September 15. What was the total interest paid on the loan for the period June 1 to October 1?

Linda borrowed $19 000.00 on August 17. She paid $4500.00 on November 11, $5500.00 on December 8, and the balance on February 21. The rate of interest on the loan was 8.5%. How much did Linda pay on February 20? Use the declining balance method.

Syed bought 168 day Government of Canada T-Bills on 30 April 2016, yielding 0.6%. The face value of the bills was $55 000. He immediately sold it to a client, Zeb, at a higher price that presented a yield to the client of 0.54%. Zeb sold the T-bills after 99 days, when the short term maturity had risen to 0.75%. What profit did Zeb make?

Find the present value and the amount of discount for a four-month non-interest-bearing note for $9 180 issued December 2, 2014, if money is worth 7.2% on February 28, 2015.

Find the present value of a seven-month note for $3940 dated April 1 with interest at 7.45% if money is worth 6%, on

Arazasa Equipment Inc. (AEI)is planning to setup a small business importing and supplying medical equipment to the doctor's offices in British Columbia. The bank has setup a line of credit allowing AEI to import the equipment. The company received an initial advance of $100 000 on its revolving demand loan on April 1, 2016. On the 27th of each month, interest is calculated up to but not including 27th of the month. It is then deducted from AEI's deposit account. Because of the lack of credit history, the bank charged an interest rate of 9.75% but dropped it to 9.5% on April 17. On May 1, another $100 000 was drawn on the line of credit. How much interest did AEI pay by May 25?

Darren purchased $250 000 in 364-day T-bills 315 days before maturity to yield 2.86%. After holding it for 120 days, Darren sold the T-bill for a yield of 3.25%. a)How much did Darren pay for the T-bills? b)For how much did Darren sell the T-bills? c)What rate of return (per annum)did Darren realize on the investment?

Excel Electronics is Eastern Alberta accepted a 6-month promissory note from a customer for the $3950 balance owed on the purchase of a refrigerator. The note was dated November 8, 2015 and charged interest at 6.99%. The store's proprietor sold the promissory note 38 days later to Standard Union finance company at a price that would yield Standard Union 19% rate of return on its purchase price. What price did Standard Union pay to the proprietor of Excel Electronics?

A non-interest bearing promissory note has a $3100 maturity value and it matures in 90 days. You decide to sell the note 17 days before the legal due date. How much money do you sell it for if money is worth 5.15%?

The maturity value of a five-month promissory note issued May 31, 2013, is $2134.00. What is the present value of the note on the date of issue if money is worth 6.3%?

Find the maturity value of a 60-day, 4% note for $3000 note dated February 25, 2011.

You borrowed the amount indicated in the Balance after payment column of the following schedule from your friendly credit union. You agreed to repay the loan in monthly payments equal to of the original loan, including interest due and principal. Interest is charged at a rate of 12.2% per annum computed on the monthly balance. Repayment Schedule Required: Complete the repayment schedule (this includes totalling of the Payment, Interest paid and Principal repaid columns to check the accuracy of your work). a)What is the loan balance after the third payment? b)What is the total amount needed to repay the loan?

An investment dealer bought a 182-day Government of Canada treasury bill at the price required to yield an annual rate of return of 3.38% a)What was the price paid by the investment dealer if the T-bill has a face value of $1 000 000? b)Later the same day, the investment dealer sold this T-bill to a large corporation to yield 3.25%. What was the investment dealer's profit on this transaction?

What is the price of a 91-day, $50 000 Government of Canada treasury bill that yields 1.97% per annum?