Exam 10: Simple Interest

Louis Carroll visits his local bank to see how long it will take for $1,000 to amount to $1,900 at a simple interest rate of 12 1/2%. A. How long will it take in years? B. How long will it take in months?

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

Use exact interest. Round to nearest cent: Date Date Simple Amount Principal Interest Rate Borrowed Repaid Time Interest Paid Back \ 15,000 12\% May 12 Sept 16 A B C

Match the following terms with their definitions. -Principal and interest

Ron Tagney owns his own truck. His June interest is $210. The current rate of interest is 11%. Assuming a 360-day year, what was Ron's principal balance at the beginning of June? (Round to nearest cent.)

Jones of Boston borrowed $40,000, on a 90-day 10% note. After 60 days, Jones made an initial payment of $6,000. On day 80, Jones made an additional payment of $7,000. Assuming the U.S. Rule, what is the adjusted balance after the second payment? Use 360 days.

Amy Koy met Pat Quinn on Sept. 8 at Queen Bank. After talking with Pat, Amy decided she would like to consider a $9,000 loan at 10 1/2% to be repaid on Feb. 17 of the next year on exact interest. Calculate the amount that Amy would pay at maturity under this assumption. Round all answers to the nearest cent.

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):

The exact interest method represents time as the exact number of days divided by 365.

Janet took out a loan of $50,000 from Bank of America at 8% on March 19, 2015, which is due on July 8, 2016. Using exact interest, the amount of Janet's interest cost is:

Match the following terms with their definitions. -U.S. Rule

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

Match the following terms with their definitions. -Maturity value

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:

Joe and Kathy Graczak borrowed $132,000 for their son's four-year college education. They must repay the loan at the end of 10 years. With 7.6% on parent PLUS loan, what is the maturity value Joe and Kathy must repay?

Round to nearest cent or hundredth percent as needed: Principal Rate Time Simple Interest ? 11\% 2 \ 1,250

Desiree Brown borrowed $50,000 on a 90-day 8% note. Desiree paid $3,000 toward the note on day 40. On day 60 she paid an additional $4,000. Using the U.S. Rule, Desiree's adjusted balance after the first payment is:

Ordinary interest results in a slightly higher rate of interest than exact interest.

Given: a 12% 90-day $4,000 note. Find the adjusted balance (principal)using the U.S. Rule (360 days)after the first $800 payment on the 40th day.

The U.S. Rule is seldom used in today's workplace.