Exam 6: Simple Interest

What single payment one year from now will satisfy two obligations: $4,000 due today and $6,000 due 18 months from now? Assume that money can earn 14%.

An invoice states that interest will be charged on overdue accounts at the rate of 1½% per month. What will be the interest charges on a $3,760 billing that is 3 months overdue?

How can you determine whether two payment streams are equivalent to each other?

Calculate the simple interest rate at which one can earn $1,500 per day interest on an investment of $7,500,000.

$3,000 loan was advanced on March 1. The loan is to be repaid by the three indicated payments. Calculate the unknown payment in each case. Use the loan date as the focal date.

Dalton loaned $550,000 to Doc Holliday on August 24. On February 8 of the following year, Doc paid to Dalton the $65,000 interest that had accumulated on the debt up to that time. What simple rate of interest was Dalton charging on this loan?

Payments of $1,000 and $7,500 were originally scheduled to be paid five months ago and four months from now, respectively. The first payment was not made. What payment two months from now is equivalent to the scheduled payment if money can earn 6.25%?

A $2875.40 investment grew to $3000 after eight months. What annual rate of simple interest did it earn?

What annual rate of return would money have to earn for $1975.00 to be equivalent to $1936.53 paid 100 days earlier?

If money earns 9.5%, calculate and compare the economic value today of the following payment streams: a) Payments of $900 and $1,400 due 150 and 80 days ago, respectively. b) Payments of $800, $600, and $1,000 due 30, 75, and 125 days from now, respectively.

How many days would it take for $9,500 to grow to $10,000 at 7%?

Calculate the simple interest rate at which one can earn $500 per day interest on an investment of $1,800,000.

A&B Appliances sells a washer-dryer combination for $1535 cash. C&D Appliances offers the same combination for $1,595 with no payments and no interest for 6 months. Therefore, you can pay $1,535 now or invest the $1535 for 6 months and then pay $1,595. What value would the annual rate of return have to exceed for the second alternative to be your advantage?

John can purchase an airline ticket for $540 now or can pay $578 in 90 days. If interest is 6.6%, determine whether John should purchase the ticket now or in 90 days.

In addition to a $2,163 refund of his income tax overpayment, the Canada Revenue Agency (CRA) paid Raisa $13.36 of interest on the overpayment. If the simple interest rate paid by Revenue Canada was 5.5%, how many days' interest was paid?

$180 is to be paid now. What amount would be equivalent 3 quarters earlier given an interest rate of 6.8% per year?

Payments of $2,600, due 50 days ago, and $3,100, due in 40 days, are to be replaced by $3,000 today and another payment in 30 days. What must the second payment be if the payee is to end up in an equivalent financial position? Money now earns 8.25%. Use 30 days from now as the focal date.

Compare the economic values of two options given an annual rate of 9.25%. Option 1 - $900 in 5 months and $400 in 9 months. Option 2 - $550 in 7 months and $825 in 10 months. Given the following information, choose the best option.

Larissa earned $8.74 interest on $1,100 invested from January 11 to June 4. What annual rate of simple interest did she earn?

Raimo borrowed $750 from Chris on October 30 and agreed to repay the debt with simple interest at the rate of 4.3% on May 10. How much interest was owed on May 10? Assume that February has 28 days.