Deck 10: Interest

Question 1

What is the difference between the exact simple interest and the ordinary simple interest on a 200-day loan of $5,000 at 12%?

A) $15.65
B) $14.16
C) $6.56
D) $4.56

Answer 1

D

Question 2

Rikki deposited $5,000 into an account with an interest rate of 6% for 7 years. If the interest is compounded quarterly, how many compounding periods are there?

A) 1 period
B) 7 periods
C) 14 periods
D) 28 periods

Answer 2

D

Question 3

The face value on a loan is $8,000, the interest is 10%, and the time is 5 months based on a 360-day year. The bank discounted the note at 12% two months before the maturity of the loan. What is the bank discount?

A) $686.67
B) $333.33
C) $267.14
D) $166.67

Answer 3

D

Question 4

Use the compound interest table to calculate the compound interest on Corrine s principal of $3,000 at 6% compounded quarterly for two years.

A) $285.39
B) $379.48
C) $1,781.54
D) $3,379.49

Question 5

What is the compound amount at the end of a 2-year period on a loan with an original principal of $1,750 at 8% compounded semiannually? Round to the nearest cent after each calculation.

A) $2,047.25
B) $2,030.00
C) $2,029.37
D) $2,370.00

Question 6

The face value of a note is $7,000 with an interest rate of 11%. The time is based on 90 days in a 360-day year, and the loan was taken out on February 11 in a nonleap year. The note has been discounted 14% on March 10. What are the proceeds?

A) $1,285.42
B) $1,293.53
C) $7,016.28
D) $7,360.33

Question 7

What is the compound interest earned at the end of a 3-year period on a loan with an original principal of $4,500 at 6.75% compounded annually?

A) $303.75
B) $628.00
C) $911.25
D) $974.14

Question 8

What is the interest rate on a 240-day loan for $3,000 which accrues $220 in ordinary simple interest?

A) 9%
B) 10%
C) 11%
D) 12%

Question 9

Which is the same as the face value of a loan?

A) the term of a loan
B) the maturity value of a loan
C) the principal of a loan
D) the discount of a loan

Question 10

The date of a note is February 2, and interest is due on August 1. How many days is it from the initial date of the note to the day the interest is due? Assume a nonleap year.

A) 200 days
B) 180 days
C) 160 days
D) 140 days

Question 11

In Excel, a formula can be used to add a number to a date to calculate the maturity date of a loan.

Question 12

The face value of a note is $1,250 with an interest rate of 13%. The time is based on 180 days in a 360-day year. The note has been discounted at 17% two months before the maturity of the note. What are the proceeds?

A) $1,293.53
B) $1,285.42
C) $1,277.08
D) $1,250.00

Question 13

Malika borrowed $12,900 at an ordinary simple interest rate of 9% for 120 days. If she took the loan out on June 2, what is the due date? Assume a nonleap year.

A) October 2
B) September 30
C) September 1
D) August 31

Question 14

What is the simple interest on a 10-month loan of $8,400 at 7.75%?

A) $651.00
B) $644.50
C) $542.50
D) $440.00

Question 15

What is the maturity value of a 6-month loan for $2,500 at 13% ordinary simple interest?

A) $2,642.47
B) $2,662.50
C) $160.27
D) $162.50

Question 16

Use the compound interest table to calculate the maturity value on Jackson s principal of $7,250 at 12% compounded annually for five years.

A) $22,517.40
B) $20,876.84
C) $16,935.62
D) $12,776.98

Question 17

What is the exact simple interest on a 150-day loan of $2,350 at 10%?

A) $96.58
B) $58.67
C) $28.20
D) $9.66

Question 18

To calculate a bank discount, divide the maturity value by the discount percent.

Question 19

What is the compound interest earned on Josef's principal of $2,750 at 8% interest compounded quarterly for 2 years? Round to the nearest cent after each calculation.

A) $327.86
B) $440.00
C) $472.06
D) $620.00

Question 20

The initial date of a note is February 11. If the interest is due on August 30, there are 120 days from the initial date of the note to the day the interest is due. Assume a nonleap year.

Question 21

The _________ of a loan is the amount the borrower receives, which is the maturity value less the bank discount.

Question 22

What is the compound amount if Alicia deposited $6,500 at 10% interest compounded quarterly for one year? Round to the nearest cent after each calculation.

Question 23

Use the compound interest table to calculate the maturity value of an inheritance of $2,000, using 8% interest, compounded quarterly for 4 years.

Question 24

Andy invests his savings into an account that compounds interest quarterly. To find the number of compounding periods, multiply the number of years of the investment times _______.

Question 25

What is the time on a $14,500 loan at 15% which accrues $4,350 in simple interest?

Question 26

What is the simple interest on a 3-year loan of $11,000 at 2.5%?

Question 27

What is the compound interest earned at the end of a 2-year period on a loan with an original principal of $8,000 at 7% compounded annually?

Question 28

What is the ordinary simple interest on a 225-day loan of $1,250 at 8.7%?

Question 29

Using the present value table, calculate how much should be invested today to have $11,200 in 6 years at 8% interest compounded quarterly.

A) 49,230.10
B) $6,963.28
C) $5,376.00
D) $2,766.16

Question 30

Malcolm anticipates his college tuition and books to be $50,000 in 3 years. His family recommends an investment that pays 8% interest compounded quarterly. Use the present value table to calculate how much Malcolm should invest today.

Question 31

What is the interest rate on a 2-year loan for $5,500 which accrues $1,430 in ordinary simple interest? Round to the nearest whole percent.

Question 32

Alex is using Excel to calculate the compound interest he will receive on an investment. His investment accrues interest on a quarterly basis. If the yearly interest rate is 8% and stored in Cell B3, what formula should Alex use to calculate the 1st quarter interest rate?

A) =B3/3
B) =B3/4
C) =B3*3
D) =B3*4

Question 33

What is the simple interest on an 18-month loan for $12,000 at an interest rate of 8.25%?

Question 34

The face value on a loan is $11,289, the interest is 6.5%, and the time is 7 months. The bank discounted the note at 12% two months before the maturity of the loan. What is the bank discount?

Question 35

The date of a promissory note is entered in Cell A2 as a date; 4/10/2010, and the number of days before discount is entered in Cell A3 as a number, 35. What must be done in Excel to calculate the discount date?

A) Both Cell A2 and Cell A3 must first be converted to dates and then added together.
B) Both Cell A2 and Cell A3 must first be converted to numbers and then added together.
C) Subtract Cell A3 from A2.
D) Add cell A3 to A2.

Question 36

The face value of a note is $10,000 with an interest rate of 8.5%. The time is based on 180 days in a 360-day year. The note has been discounted at 14% three months before the maturity of the note. How much are the proceeds?

Question 37

What is the difference between the exact simple interest and the ordinary simple interest on a 180-day loan of $3,450 at 9%?

Question 38

Kelly borrowed $3,000 with an interest rate of 7.2%. The time is based on 90 days in a 360-day year and the loan was taken out on August 19. The note has been discounted 14% on October 10. What are the proceeds?

Question 39

What is the principal on a 200-day loan at 8.25% which accrues $275 in ordinary simple interest?

Question 40

What is the maturity value on a 120-day loan for $850 at 15% ordinary simple interest?

Question 41

What is the compound interest at the end of a 2-year period on a loan with an original principal of $5,000 at 10% compounded semiannually? Round to the nearest cent after each calculation.

Question 42

Mr. and Mrs. Jacobson borrowed $5,000 at an ordinary simple interest rate of 11% for 180 days. If they took the loan out on October 16, what is the due date? Assume a nonleap year.

Question 43

Use the compound interest table to calculate the compound interest of $10,000, using 5% interest, compounded annually for 8 years.

Question 44

The face value of a note is $7,500 with an interest rate of 12%. The time is based on 90 days in a 360-day year. The note has been discounted at 15% two months before the maturity of the note. How much is the discount and the proceeds?

Question 45

Why is it important to verify the results of formulas you enter in an Excel spreadsheet?

Question 46

A friend needs to take out a loan to start a business. The friend asks you to help compare loans to determine which is the best deal. Explain how you could set up a spreadsheet to compare simple, ordinary, and exact interest. Include column headings, information required, and formulas needed.

Question 47

Giovanni anticipates moving his business back to Italy in 5 years and estimates the cost to be $30,000. His bank recommends that he make an investment today that will pay 6% compounded quarterly to pay for the move. Using the present value table, calculate how much should be invested today to earn $30,000 in 5 years at 6% interest compounded quarterly.

Question 48

What is the maturity due date on a 100-day loan that begins April 15?

Question 49

What is the number of days in a loan that extends from January 21 to June 20? Assume a nonleap year.

Question 50

Use the compound interest table to calculate the compound amount of $6,000, using 18% interest, compounded semiannually for 5 years.

Question 51

You inherited $1,000 from your grandparents and place this amount in your savings account. If your bank pays 6% compounded quarterly, how much interest will you earn one year from now? Round to the nearest cent after each calculation.

Question 52

The face value of a note is $5,290 with an interest rate of 8%. The time is based on 60 days in a 360-day year, and the loan was taken out on March 17. The note has been discounted 16% on April 3. What are the proceeds?

Question 53

What is the compound amount at the end of a 3-year period on a loan with an original principal of $12,750 at 11% compounded annually? Round to the nearest cent after every calculation.

Question 54

The face value on a loan is $18,500, the interest is 9.25%, and the time is 18 months. The bank discounted the note at 15% three months before the maturity of the loan. What is the bank discount?

Question 55

The date of a note is July 18 and interest is due on September 6. How many days is it from the initial date of the note to the day the interest is due?