Exam 7: Applications of Simple Interest

Calculate missing value for the promissory note:

A six-month non-interest-bearing note issued on April 11, 2013, for $4,000 was discounted at 6.25% on September 2, 2013. What were the proceeds of the note?

Certificate A pays $1,200 in six months and $1,100 in one year. Certificate B pays $1,150 in three months and $1,150 in one year. If the current rate of return required is 6.75%, which option pays the most interest and by how much?

Calculate missing value for the promissory note:

Calculate missing value for the promissory note:

At the end of April, Brad had $7,500 in his daily interest savings account. On the 13^th of May he deposited another $3,500. He made no other deposits or withdrawals in May. The interest rate throughout May was 3.7%. How much interest did Brad earn on this savings account in May?

Claude Scales, a commercial fisherman, bought a new navigation system for $10,000 from Coast Marine Electronics on March 20. He paid $2,000 in cash and signed a conditional sales contract requiring a payment on July 1 of $3,000 plus interest on the $3,000 at a rate of 8%, and another payment on September 1 of $5,000 plus interest at 8% from the date of the sale. The vendor immediately sold the contract to a finance company, which discounted the payments at its required return of 12%. What proceeds did Coast Marine receive from the sale of the contract?

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 $5,800 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 4% 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.

Calculate missing value for the promissory note:

A chartered bank offers a rate of 5.50% on investments of $25,000 to $59,999 and a rate of 5.75% on investments of $60,000 to $99,999 in 90 to 365-day GICs. How much more will an investor earn from a single $80,000, 180-day GIC than from two $40,000, 180-day GICs?

On the June 12 interest payment date, the outstanding balance on Delta Nurseries' revolving loan was $65,000. The floating interest rate on the loan stood at 6.25% on June 12, but rose to 6.5% on July 3, and to 7% on July 29. An additional $10,000 was drawn on June 30. What were the interest charges to Delta's bank account on July 12 and August 12?

Alice purchased a $100,000 180-day Acme Corporation Commercial Paper when it was first issued at a yield rate of 7.45%. 50 days later she sold it to Betty at a rate that would provide Betty with a return of 8.45% if Betty held it to maturity. What annual simple rate did Alice actually realize over the period that she held the Commercial Paper?

Dr. Robillard obtained a $75,000 operating line of credit at prime plus 1%. Accrued interest up to but not including the last day of the month is deducted from his bank account on the last day of each month. On February 5 (of a non-leap year) he received the first draw of $15,000. He made a payment of $10,000 toward principal on March 15, but took another draw of $7,000 on May 1. Prepare a loan repayment schedule showing the amount of interest charged to his bank account on the last days of February, March, April, and May. Assume that the prime rate remained at 3.5% through to the end of May.

Calculate missing value for the promissory note:

Calculate missing value for the promissory note:

A $100,000, 182-day Province of New Brunswick Treasury bill was issued 66 days ago. What will it sell at today to yield the purchaser 2.48%?

What is the price of a $50,000, 182-day T-bill on its issue date if the market rate of return on this date was 6.875%?

What is the simple interest rate of a 7-month GIC that grows from $30,000 to its maturity value of $31,500?

Calculate the maturity value of a 120-day, $1,000 face value note dated September 5, 2013, earning interest at 4.75%.

An investment earning 16% simple interest has a maturity value of $9,440.00 after eight months. What was the initial amount invested?