Exam 6: Simple Interest

Peter and Reesa can book their Horizon Holiday package at the early-booking price of $3,850, or wait four months and pay the full price of $3,995. a) Which option should they select if money can earn a 5.25% rate of return? In current dollars, how much do they save by selecting the preferred option? b) Which option should they select if money can earn a 9.75% rate of return? In current dollars, how much do they save by selecting the preferred option? c) At what interest rate would they be indifferent between the two prices?

A $5,000 payment is scheduled for 120 days from now. If money can earn 7.25%, calculate the payment's equivalent value at each of nine different dates: today and every 30 days for the next 240 days.

If $59,200 grows to $60,000 in 41 days what simple annual interest rate was earned?

If, on March 11, $12,000 was placed in an investment earning an interest rate of 16%, on what day will the amount of interest earned reach $1,000?

A principal of $2,680 is invested for 2.5 years at a rate of 12%. What amount of interest will be earned?

What simple interest rate was used if Eddie charged Meatball $700 interest on a loan of $5,000 for 26 days?

Calculate the missing values:

Kristina earned $33.70 at an interest rate of 2.5% from November 29 to April 1. What amount did she invest? Assume that February has 28 days.

Calculate the amount of money that would have to be invested at 8.5% to earn monthly interest of $3,000?

A $10,000 loan made on January 1 at 7%, is to be repaid by payments of $3,500 on July 1, $3,500 on October 1, and a final payment on January 1 of the next year. What is the amount of the final payment required to pay off the loan in full?

On April 3 Artie invested $75,000 and by October 27 he had earned interest of $10,500. What simple interest rate had he earned?

The interest earned on a $7,500 investment was $1181.25. What was the term in months if the rate of interest was 3.5%?

Payments of $700 due three months ago and $1,000 six months from now are to be replaced by one equivalent payment four months from now. What is the size of this payment if money can earn 7%?

Cindy borrowed $750 from Clare on April 17 at an interest rate of 15%. On June 30 of the same year, Clare repaid the loan with interest. How much interest should she have paid?

Two payments of $8,000 in 60 days and $5,000 in 90 days are to be replaced by a payment now and another payment of $2,500 in 30 days. If interest is 7.3% annually, determine the value of the payment now.

Which of the following two payment streams has the greater economic value today if money can earn 3.5%: $500 now, $600 in three months, plus $900 in six months or $700 now, $300 in three months, plus $1,000 in nine months?

Grandma Jones has $300,000 in a bank account, which pays her interest at 3%. What is the largest amount of money that she could take out now and still leave enough in the account so that she can earn $600 per month in interest?

How much interest would one earn over 200 days on an investment of $95,000 at an interest rate of 14%?

Grandpa Smith has $200,000 in a bank account, which pays him interest at 4%. What is the largest amount of money that he could take out now and still leave enough in the account so that he can earn $500 per month in interest?

After 7 months at an interest rate of 13%, an investment matured today at a value of $80,000. How much of the $80,000 is interest?