Exam 6: Simple Interest

What simple annual interest rate would you need to earn $2,000 interest in 147 days on an investment of $49,000?

Compare the economic values of two options given an annual rate of 8.5%. Option 1 - $900 in 60 days and $1,200 in 180 days. Option 2 - $925 in 90 days and $1,050 in 120 days. Given the following information, choose the best option.

Payments of $100,000 and $150,000 are due to be paid in 45 days and 75 days respectively. If money is worth 7.3%, what is the combined economic value today of the two payments?

Umberto borrowed $7,500 from Delores on November 7, 2013. When Umberto repaid the loan, Delores charged him $190.02 interest. If the rate of simple interest on the loan was 6.75%, on what date did Umberto repay the loan?

Determine a) whether the earlier or later payment has the greater economic value at the given interest rate and b) the interest rate at which the two payments would be equivalent:

$7348.25 was the amount required to pay off a loan after 14 months. If the loan was at 8.25% per annum simple interest, how much of the total was interest?

What amount on January 23 is equivalent to $1,000 on the preceding August 18 if money can earn 6.5%?

What is the economic value today of each of the following payment streams if money can earn 7.5%? (Note that the two streams have the same total nominal value.) a) $1,000, $3,000, and $2,000 due in one, three, and five months, respectively. b) Two $3,000 payments due two and four months from now.

How long would it take for a $25,000 investment to earn $2,000 interest at 13.5%?

Patrick has a contract that will pay him $3,500 in 11 months. If money can earn 15%, what will be the value of that contract three months from now?

Maia's chequing account was $329 overdrawn beginning on September 24. On October 9 she made a deposit that restored a credit balance. If she was charged overdraft interest of $2.50, what annual rate of simple interest was charged?

On September 4 Fred made a $25,000 loan to Ricky for an investment that was guaranteed to earn an interest rate of 40%. On March 11 of the following year, Ricky cashed in his investment and received the interest as had been promised. How much interest had he earned?

A payment of $590 is now 93 days overdue. A second payment of $955 will be due and payable in 200 days. If money can earn an interest rate of 11%, what single amount, paid in 30 days, will be an equivalent replacement payment?

How much will have to be deposited to earn $600 interest over two years at an interest rate of 3%?

If you pay your $3,000 tuition 3 months before it is due, the local college will give you a $250 "scholarship" reducing your tuition payment to $2,750. What is the annual simple interest rate to which this incentive is equal?

Two payments of $2,000 each are to be received six and twelve months from now. If money is worth 10%, what is the total equivalent value of the payments: a) Today? b) Six months from today? c) Explain why the answer in part (b) is larger.

An investment earned $156.25 interest in 30 months. What was the simple annual rate of interest?

After how many days will a loan of $888 at 15% amount to $1554 (including accrued interest)?

Marliss made a $780.82 purchase on her Visa card. Including 45 days' interest, the amount billed on her credit card was $798.63. What annual interest rate does her card charge?

What is meant by "equivalent payments"?