Exam 7: Applications of Simple Interest

A 90-day non-interest-bearing promissory note for $3,300 is dated August 1. What would be a fair selling price of the note on September 1 if money can earn 7.75% simple interest?

The purchaser of a 168-day T-bill with a face value of $100,000 paid $98,929.92 for it. After 50 days, interest rates had increased and she sold the T-bill at 2.85% simple interest. What price did she receive for the T-bill?

A 4-month Guaranteed Investment Certificate with a face value of $55,000 will have a maturity value of $56,100. What simple annual interest rate is it carrying?

Calculate missing value for the promissory note:

Calculate the price on its issue date of $100,000 face value, 90-day commercial paper issued by G E Capital Canada if the prevailing market rate of return is 0.932 simple interest%.

270-Day Commercial Paper with a face value of $500,000 was sold 206 days after it was issued at a price that would provide a simple rate of interest to the purchaser of 9.85%. What was the price?

An assignable loan contract executed 3 months ago requires two payments of $3,200 plus interest at 9% from the date of the contract, to be paid 4 and 8 months after the contract date. The payee is offering to sell the contract to a finance company in order to raise urgently needed cash. If the finance company requires a 16% simple interest rate of return, what price will it be prepared to pay today for the contract?

Liam had $5,200 in student loans. On August 9, he began repayments of $50 per month when simple interest rates were 9.2% annually. On September 8, the interest rates rose to 9.5%. By what amount will the principal be reduced given the $50 payment on September 30?

How much simple interest would be earned by a six-month, $30,000 Guaranteed Investment Certificate at 5.7%?

Marcie has a $20,000 personal line of credit with an interest rate of prime + 3%. On the last day of each month, a payment equal to the greater of $500 or 4% of the current balance (including the current month's accrued interest) is deducted from her chequing account. On December 6, she withdrew $5,000. On January 15, she withdrew $12,000. The prime rate during this time was 3%. Prepare a loan repayment schedule up to and including February 28.

On April 7, Madeline had $10,500 in student loans outstanding. She agreed to $75 per month payments to repay these loans. From April 7 to May 5, the interest rates were 3.25%, but increased to 4.5% thereafter. Calculate the amount of simple interest paid for the month of May.

On February 1, John signed a contract to pay Janet $4,500 plus interest on April 2 and $5,500 plus interest on July 31. Both payments carried a 6.5% simple interest annually. Janet then sold both contracts to Fred on May 1 at a rate of 4.5% annually. Determine how much she received.

If you purchase an investment privately, how do you determine the maximum price you are prepared to pay?

Calculate the maturity value of a 300-day, $6,000 term deposit earning 5.15% simple interest.

Beth borrowed $5,000 on demand from Canada Trust on February 23 for a Registered Retirement Savings Plan (RRSP) contribution. Because she used the loan proceeds to purchase Canada Trust's mutual funds for her RRSP, she received a special interest rate of prime plus 0.5%. Beth was required to make fixed monthly payments of $1,000 on the 15^th of each month, beginning April 15. The prime rate was initially 4.75%, but it jumped to 5% effective June 15 and increased another 0.25% on July 31. (It was not a leap year.) Construct a repayment schedule showing the amount of each payment and the allocation of each payment to interest and principal.

Calculate missing value for the promissory note:

What will be the maturity value of $25,000 placed in a 90-day term deposit paying a simple interest rate of 4.75%?

A $100,000, 182-day Province of New Brunswick Treasury bill was issued 66 days ago. What will it sell at today to yield the purchaser 2.48% simple interest?

What is the simple interest rate of a 7-month GIC that grows from $30,000 to its maturity value of $31,500?

An investment will pay $3,000 six months from now. What purchase price will provide a rate of return of 12% simple interest?