Exam 1: Simple Interest and Simple Discount

Which of the following statements is (are)true? (i)A merchant receives an invoice for $10,000 with terms 4/30,n/90.He/she should not take advantage of the discount if he/she can borrow money at r = 20% (ii)A 60-day promissory note has a maturity value of $5000.Its price 30- days before maturity,at a rate of simple discount d = 4%,is $4983.56

You take out a loan of $10,000 today at simple interest at r = 15%.You make the following payments: $100 in two months,$8000 in four months and the balance in 6 months.What is the final balance according to the Declining Balance Method?

A loan of $10,000 is taken out on November 7,2006 at a simple interest rate of r = 9%.The loan will be paid back on May 11,2007.If the bank uses ordinary interest (the Banker's Rule),how much interest is charged?

You buy some furniture for $600.The department store offers you "no interest for 8 months" after which you can pay the $600 in one lump sum.To take advantage of this deal,the store charges a $25 service fee,which is to be paid today.What rate of simple interest is the store charging you for this "no interest" loan?

A merchant receives an invoice for $25,000 with terms 4/15,n/60.What is the highest simple interest rate at which he can afford to borrow in order to take advantage of the discount?

You have two options available in repaying a loan.You can pay $2000 at the end of 5-months and $3000 at the end of 10-months OR you can pay $X at the end of 2-months and $3X at the end of 9-months.If the simple interest rate is r = 4% and the focal date is at the end of 5-months,what is X?

What is X,if the Merchant's rule is used?

A $2000 loan is paid off with a payment of $800 in 50 days and a final payment of $1240 in 90 days (after date of loan).Assuming the Merchant's rule,what simple interest rate,r,was used?

You invest $15,000 on December 2,2010 at a simple interest rate of r = 6%.Interest is to be calculated using ordinary interest (banker's rule).What is the accumulated value of your investment on June 12,2011?

A merchant receives an invoice for $8000 with terms 2/10,n/50.What is the maximum interest rate that the merchant could borrow money at to take advantage of the discount?

You invest $20,000.It earns simple interest at 7% for the first 5 months and 8% for the next 3 months.What is the accumulated value at the end of 8 months?

A loan of P is taken out at a simple interest rate of r = 10.4%.Two months later,a partial loan payment of $500 is made.Of this payment,$301.34 went towards paying interest on the loan while $198.66 went to reducing the outstanding balance of the loan.What is the value of P? (Answer to nearest dollar)

A loan of $10,000 is taken out on October 29,2010 and is to be paid off with 2 equal installments of X,to be paid on November 18 and December 29.What is the value of X if r = 7% and the Merchant's rule is used?

Using the Merchant's rule,a debt of $4000 is paid off as follows: $1000 in 30 days from today,$2000 in 60 days from today,and a final payment of $1026.51 in 80 days from today.What simple interest rate,r,was used?

A loan was taken out on January 1,2007 at a simple interest rate of 8.5%.Interest is to be calculated using ordinary interest (banker's rule).The amount repaid on December 29,2007 is $13,027.02.What was the original amount of the loan?

Dave takes out a loan for $5000 to be repaid at the end of 9 months.The simple interest rate on the loan is r = 9% for the first two month,r = 12 % for the next 6 months,and r = 6% thereafter.How much does Dave have to pay back at the end of 9 months?

You buy some furniture for $800 and pay "no interest" for n-days.This means that after n-days,you owe the furniture company $800.However,there is an administration fee of $50 that you must pay today (when you buy the furniture).If the rate of simple interest that you are being charged is 12.4%,what is n (Answer to nearest day)?

Interest of $300 is charged on a loan of $7300 bearing interest at r = 11%.What was the term of the loan? (Answer to the nearest day)

A $12,000 short term loan was taken out on April 3,2010 at a simple interest rate of 8%.The amount repaid was $12,481.32.On what date in 2010 was the loan repaid?

A merchant issues a promissory note.The note has a term of 90 days and a maturity value of $6122.30.The note is sold after 30 days to a bank that discounts the note at d = 10% simple discount.How much does the bank pay for the note?