Exam 8: Simple Interest Applications

FIGURE 8.1 Basic Design of a Loan Repayment Schedule Use the design shown in Figure 8.1 to construct a complete repayment schedule including the totaling of the Amount Paid,Interest Paid,and Principal Repaid columns for the following loan. On April 22,Tim borrowed $2900.00 from Keewatin Credit Union at 6.5% per annum calculated on the daily balance.He gave the Credit Union four cheques for $535.00 dated the 15th of each of the next four months starting May 15 and a cheque dated October 15 for the remaining balance to cover payment of interest and repayment of principal.

Bradley purchased a 91-day,$100 000 T-bill on its issue date for $99 237.96.What was the original yield of the T-bill?

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.

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%?

For the following promissory note,determine the amount of interest due at maturity.

Find the maturity value of a 60-day,4% note for $3000 note dated February 25,2011.

Find the present value of a non-interest-bearing seven-month promissory note for $1800 dated August 27,2012,on December 4,2012,if money is then worth 8.375%.

A $2850,five-month promissory note with interest at 6.15% is issued on June 1.Compute the proceeds of the note on August 13,when money is worth 7.5%.

Calculate the legal due date of a $600.00,120 day note with interest at 5% dated March 2,2014.

The East Lake Karate Club arranged short-term financing of $41 500.00 on July 27 with the Bank of Commerce and secured the loan with a demand note.The club repaid the loan by payments of $13 000.00 on September 25,$7500.00 on November 17,and the balance on December 20.Interest calculated on the daily balance and charged to the club's current account on the last day of each month,was at 8.5% per annum on July 27.The rate was changed to 8.75% effective September 1 and to 9.14% effective December 1.Determine the total interest cost.

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%?

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.

Compute the present value of a 150-day non-interest-bearing promissory note for $5000 dated June 15,if the note was sold on August 21 and money is worth 6.5%.

Tracey bought a 182-day Government of Canada treasury bill at the price to yield an annual rate of return of 4.68%. a)What was the price paid by Tracey if the T-bill has a face value of $100 000? b)Later the same day,Tracey sold this T-bill to a large corporation to yield 4.48%.What was Tracey's profit on this transaction?

CIBC approved a $10 000 personal line of credit on a demand basis to Tara,who takes an advance of $2240 on 1^st of every month to settle her monthly budget.She settles her loan when she receives her pay on 15^th of every month.Interest at the rate of prime (3%)plus 2.75% is charged to the account at the bank on the 15^th of each month.What is Tara's payment each month to settle the loan?

A 60-day non-interest-bearing promissory note for $10 000 is dated June 1,2013.Compute the present value of the note on June 14,2013,if money is worth 5%.

You purchase a 182-day treasury bill for $240,000 at a rate of 3.546%.What did you sell it for 111 days before maturity if the new interest rate is 3.778%?

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?

You bought a $100 000 364-day T-bill.The T-bill was discounted at a rate of 5%.If you paid $99 900.00 for the T-bill,how many days before maturity did you buy it?

You borrowed $4600 at 9.1% per annum calculated on the unpaid monthly balance and agree to repay the principal together with interest in monthly payments of $1050 each.Construct a complete repayment schedule.