Exam 7: Applications of Simple Interest

A 90-day non-interest-bearing note issued on September 30, 2003 for $5000 was discounted at 5.75% on November 5, 2003. What were the proceeds of the note?

A 6-month note dated June 30 for $2900 bears interest at 13.5%. Determine the proceeds of the note if it is discounted at 9.75% on September 1.

Harjap completed his program at Nova Scotia Community College in December. On June 30, he paid all the interest that had accrued (at prime plus 2.5%) on his $5800 Canada Student Loan during the 6-month grace period. He selected the fixed rate option (prime plus 5%) and agreed to make end-of-month payments of $95 beginning July 31. The prime rate began the grace period at 8% and rose by 0.5% effective March 29. On August 13, the prime rate rose another 0.5%. The relevant February had 28 days. a) What amount of interest accrued during the grace period? b) Calculate the total interest paid in the first three regular payments, and the balance owed after the third payment.

For 90- to 365-day GICs, TD Canada Trust offered a rate of 3.00% on investments of $25,000 to $59,999 and a rate of 3.20% on investments of $60,000 to $99,999. How much more will an investor earn from a single $60,000, 270-day GIC than from two $30,000, 270-day GICs?

A 6-month non-interest-bearing note issued on September 30, 2010 for $3300 was discounted at 11.25% on December 1. What were the proceeds of the note?

Calculate missing value for the promissory note:

Calculate missing value for the promissory note:

Calculate missing value for the promissory note:

An assignable loan contract executed three months ago requires two payments to be paid five and ten months after the contract date. Each payment consists of a principal portion of $1800 plus interest at 10% on $1800 from the date of the contract. The payee is offering to sell the contract to a finance company in order to raise cash. If the finance company requires a return of 15%, what price will it be prepared to pay today for the contract?

Calculate missing value for the promissory note:

Calculate missing value for the promissory note:

The Moneybuilder account offered by a chartered bank calculates interest daily based on the daily closing balance as follows: The balance at the beginning of March was $1678. On March 5, $700 was withdrawn. Then $2500 was deposited on March 15, and $900 was withdrawn on March 23. What interest will be credited to the account for the month of March?

Calculate missing value for the promissory note:

Scotiabank approved a $75,000 line of credit for Curved Comfort Furniture on the security of its accounts receivable. Curved Comfort drew down $30,000 on October 7, another $15,000 on November 24, and $20,000 on December 23. The bank debited interest at the rate of prime plus 1.5% from the business's bank account on the fifteenth of each month. The prime rate was 6.25% on October 7, and dropped by 0.25% on December 17. Present a loan repayment schedule showing details of transactions up to and including January 15.

A $100,000, 168-day Government of Canada Treasury bill was purchased on its date of issue to yield 3.1%. a) What price did the investor pay? b) Calculate the market value of the T-bill 85 days later if the rate of return then required by the market has: (i) risen to 3.4%. (ii) remained at 3.1%. (iii) fallen to 2.8%. c) Calculate the rate of return actually realized by the investor if the T-bill is sold at each of the three prices calculated in part (b).

An investment will pay $3000 six months from now. What purchase price will provide a rate of return of 12%?

On a $10,000 principal investment, a bank offered interest rates of 3.45% on 270- to 364-day GIC's and 3.15% on 180- to 269-day GICs. How much more will an investor earn from a 364-day GIC than from two consecutive 182-day GICs? (Assume that the interest rate on 180- to 269-day GICs will be the same on the renewal date as it is today. Remember that both the principal and the interest from the first 182-day GIC can be invested in the second 182-day GIC.)

Calculate missing value for the promissory note:

Calculate missing value for the promissory note:

Calculate missing value for the promissory note: