Exam 1: Simple Interest and Simple Discount

A man takes out a discounted loan,with face amount $8235,at a simple discount rate of d = 7.5%.If the amount he pays back in 11 months is $8235,how much interest does the man pay on the loan and when does he pay the interest?

You deposit $100,000 on March 31,2010 in a fund earning simple interest at r = 6%.Using the banker's rule (ordinary interest),how much do you have on July 31,2010?

Jim lends $8000 to Sally on September 23,2006.Sally signs a promissory note,with the note due in 10 months.The maturity value of the note is $8536.55.Jim sells the note to a bank on February 23,2007.If the bank wishes to earn r = 8%,what price does Jim get for the note?

On July 8,2014,Josephine lends Joni $10,000.Joni gives Josephine a 90-day non-interest bearing promissory note with face amount $10,000.On August 12,2014,Josephine sells the note to a finance company that uses a simple interest rate r = 5%.What are the proceeds received by Josephine?

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

You invest $50,000 today.It earns simple interest at 15% for the first 5 months,10% for the next 3 months and 12% for the last 2 months.What is the accumulated value at the end of 10 months?

A loan of $4000 is paid off over 9-months at a simple interest rate of r = 8%.The borrower makes partial payments of $150 in 3-months and $2500 in 6-months.Using the declining balance method,what is the final balance due at the end of 9-months?

A merchant receives an invoice for a motor boat for $5000 with term 4/30,n/100.In order to take advantage of discount,he wants to borrow the required money.If he can borrow at r = 14%,how much money does he save?

You go to a lending institution that offers a 270-day discounted loan at d = 9%.You wish to walk out the door with $5000.What size loan should you ask for?

Jane borrows $10,000 and writes a promissory note on July 10,2011.The due date is December 12,2011.The value on the maturity date is $10,472.00.Prior to the maturity date,it is sold to a bank that discounts the note at r = 5%.If the bank pays $10,383.81 for the note,on what day was it sold?

The note is sold after 80 days to a bank for $6142.29.What rate of return,r,is earned by the original owner (payee)of the note?

If the maturity value is $15,012.47,what is the face value of the note? (to nearest dollar)

A loan of $20,000 is to be paid off with 2 equal installments of X,occurring 3 months from now and 8 months from now.What is the value of X if r = 9 % and Merchant's Rule is used?

You buy a stove for $1500 on March 20,2010.The store gives you 4 months "interest free",so on July 20,2010 you must pay the $1500.However,the store charges an administration fee of $50,to be paid today.What rate of simple interest,r,are you being charged for this "interest free" plan?

A company owes $100,000 at the end of 1-month and another $200,000 at the end of 11-months.Instead,they wish to consolidate their loans and make one single payment of $X at the end of 6 months.It is agreed that the end of 5-months will be the focal date.If the interest is r = 12%,what is the value of X?

ABC Company borrows $P from XYZ bank on March 3,2010 by writing a promissory note,due in 6 months at a simple interest rate of 5%.The bank uses ordinary interest in its calculations.If the maturity value of the note is $257,000,what is P? (Answer to nearest dollar)

You go to a bank that offers a 270-day discounted loan at d = 9%.You wish to walk out the door with $5000.What size loan should you ask for?

A merchant receives an invoice for $8000 with terms 2/10,n/60.What is the highest rate of simple interest at which he can afford to borrow in order to take advantage of the discount?