Exam 8: Simple Interest Applications

Determine the missing information for the following line of credit. Harold has a line of credit secured by the equity in his home. The limit on his line of credit is $85 000. Transactions for the period May 1 to September 30 are shown below. Harold owed $45 967.06 on his line of credit on May 1. Principal Principal Interest Date Withdrawal Payment Payment Balance --------------------------------------------------------------------------------------------- May 01 -45 967.06 30 1200.00 ? June 23 5 050.00 30 2200.00 ? July 10 6700.00 ? Aug 05 11 700.00 31 8200.00 ? Sept 30 6200.00 ? Note: "-" indicates a negative balance. Overdraft interest is 28.8% p.a. The line of credit interest is variable. It was 6.15% on May 1, 6.50% effective June 20, and 6.55% effective September 10. a) Calculate the interest payments on May 31, June 30, July 31, August 31, and September 30. b) What is the account balance on September 30?

A promissory note has a face value of $4 500 and it carries an interest rate of 8.73% for a period of 4 months (including the period of grace). It is sold 3 months before the legal due date. What is the present value of the note on the date of sale if money is worth 8.2%?

You bought a $100,000 91-day T-bill for $99453.67 61 days before maturity. What discount rate was used?

A six-month promissory note dated November 8, 2013 is made at 6% for $2 900.00. What is the present value of the note thirty-eight days later if money is worth 7.2%?

A non-interest bearing promissory note has a $3100 maturity value and it matures in 90 days. You decide to sell the note 17 days before the legal due date. How much money do you sell it for if money is worth 5.15%?

A note for $665 dated March 22, 2014, with interest at 7.34% per annum, is issued for 128 days. Determine a) the legal due date; b) the interest period (in days); c) the amount of interest; d) the maturity value.

For the following promissory note, determine the amount of interest due at maturity. $1195.00 Ottawa, Ontario January 29, 2012. Nine months after date we promise to pay to the order of Badger Lumber Company * * * * * * * *EXACTLY* * * * * * * 1195.00* * * * * * * * * * *DOLLARS at Badger Lumber Company for value received with interest at 8.25% per annum. Due ___________________ (Seal) ____________________ (Seal) ____________________

Linda borrowed $19 000.00 on August 17. She paid $4 500.00 on November 11, $5 500.00 on December 8, and the balance on February 21. The rate of interest on the loan was 8.5%. How much did Linda pay on February 20? Use the declining balance method.

Calculate the legal due date of a $10 000, 120 day note with interest at 4.56% dated March 31, 2012.

Meher purchased a $100 000.00, 182-day T-bill on April 4, 2012. a) If the annual rate of return is 4.2%, calculate the purchase price. b) Calculate the selling price of the bill if it is sold on June 20, 2012 to yield 3.19%. c) Calculate the rate of interest realized.

Amertech borrowed $32 000.00 from Balzac Credit Union on May 17 at 12%. The interest rate was changed to 14.11% effective July 1 and to 13.27% effective October 1. The loan was repaid by payments of $17000.000 on July 15 and the balance, including the accumulated interest, on November 20. How much did the loan cost?

Sean purchased a 182-day, $10 000 T-bill on its issue date for $9 754.25. What was the original yield of the T-bill?

What is the price of a 91-day, $50 000 Government of Canada treasury bill that yields 1.97% per annum?

On July 12, 2013 a 140-day note promissory note for $9 175 with interest at 5.75% was issued. Find the proceeds of the note on September 30, 2013 if money is worth 7%.

Raymond borrowed $3900.00 from Airdrie Regional Savings. The line of credit agreement provided for repayment of the loan in four equal monthly payments plus interest at 9.56% per annum calculated on the unpaid balance. Determine the total interest cost.

A promissory note has a face value of $1 725 and it has a date of issue of October 1 this year. The term is for 4 months. The rate of interest is 6.13%. What is the legal due date of the promissory note?

Determine the present value on January 17, 2014 of a non-interest-bearing promissory six-month note for $17 000.00 dated October 15, 2013 if money is worth 4.15%.

A note for $800 dated June 4, 2010, with interest at 8.25% p.a., is issued for 10 days. Determine a) the legal due date; b) the interest period (in days); c) the amount of interest; d) the maturity value.

A promissory note has a face value of $5000 and it carries an interest rate of 5% for a period of 6 months (including the period of grace). It is sold 3 months before the legal due date. What is the present value of the note on the date of sale if money is worth 4%?

You take out a demand loan on February 17th, in a non-leap year, with a local financing company. The loan is for $4500 at an interest rate of 12.15%. The interest rate rises to 12.75% on March 18th and then goes down to 12.25% on April 29th. You make partial payments of $900 on March 2nd and $1700 on May 14th. The loan is demanded in full on June 21st. What is the size of the final payment?