Question 1

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

Accepted Answer

A)  $1,023 
B)  $5,889 
C)  $7,021 
D)  $7,288 
E)  $13,300

Question 2

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:

Accepted Answer

The answer of Determine a) whether the earlier or later...

Question 3

Maurice borrowed $6,000 from Heidi on April 23 and agreed to make payments of $2,000 on June 1 and $2,000 on August 1, and to pay the balance on October 1. If simple interest at the rate of 10% was charged on the loan, what is the amount of the third payment?

Accepted Answer

The answer of Maurice borrowed $6,000 from Heidi on April...

Question 4

A late payment of $850.26 was considered equivalent to the originally scheduled payment of $830.00, allowing for interest at 9.9%. How many days late was the payment?

Accepted Answer

The answer of A late payment of $850.26 was considered...

Question 5

Calculate the amount of interest that would be earned on an account of $59,500 at 7.2% for 133 days.

Accepted Answer

A)  $4,284 
B)  $1,561 
C)  $1,013 
D)  $2,229 
E)  $3,771

Question 6

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.

Accepted Answer

A)  Option 1 - benefit of $52.35 
B)  Option 1 - benefit of $47.15 
C)  No difference between options 
D)  Option 2 - benefit of $52.35 
E)  Option 2 - benefit of $47.15

Question 7

How much money would have to be deposited on March 11 into an account earning a simple interest rate of 9.5% if the goal is to have the deposit grow to $12,000 by November 1?

Accepted Answer

A)  $10,860.00 
B)  $11,175.45 
C)  $14,098.36 
D)  $11,308.33 
E)  $11,497.44

Question 8

Kris has borrowed $2,000 and has agreed to repay the loan in two payments in nine and fifteen months. Each payment is $1,000 of principal and interest at the rate of 7%. Kris wants to settle the debt in six months. What single equivalent payment should she make if money is now worth 5%?

Accepted Answer

The answer of Kris has borrowed $2,000 and has agreed...

Question 9

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

Accepted Answer

The answer of How can you determine whether two payments...

Question 10

What was the principal amount of a loan at 9.5% if $67.78 of interest accrued from October 28, 2013 to April 14, 2014?

Accepted Answer

The answer of What was the principal amount of a...

Question 11

A payment stream consists of three payments: $1000 today, $1500 in 70 days, and $2000 in 210 days. What single payment, 60 days from now, is economically equivalent to the payment stream if money can be invested at a rate of 8.5%?

Accepted Answer

The answer of A payment stream consists of three payments:...

Question 12

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.

Accepted Answer

A)  Buy now - savings of $28.74 
B)  Buy now - savings of $34.22 
C)  No difference between the two options 
D)  Buy later - savings of $28.74 
E)  Buy later - savings of $34.22

Question 13

Three payments are scheduled as follows: $1,200 is due today, $900 is due in five months, and $1,500 is due in eight months. The three payments are to be replaced by a single equivalent payment due ten months from now. What should the payment be if money is worth 5.9%? Use ten months from now as the focal date.

Accepted Answer

The answer of Three payments are scheduled as follows: $1,200...

Question 14

Calculate the missing value:

Accepted Answer

The answer of Calculate the missing value:
 ...

Question 15

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:

Accepted Answer

The answer of Determine a) whether the earlier or later...

Question 16

Sam has won a lottery. He can take $5,000 now or $5,500 in one year. If money can earn 8%, which option should he choose?

Accepted Answer

The answer of Sam has won a lottery. He can...

Question 17

A contract was signed eight months ago requiring the payment of $13,000 plus interest at 8% after one year. What two equal payments made today and four months from today are equivalent to the original contract? Assume that money is now worth 5%. Use four months from today as the focal date.

Accepted Answer

A)  $7,020.00 
B)  $7,070.11 
C)  $6,446.28 
D)  $13,809.84 
E)  $7,078.02

Question 18

Calculate the missing value:

Accepted Answer

The answer of Calculate the missing value:
 ...

Question 19

The annual $3,600 membership fee at the Oak Meadows Golf Club is due at the beginning of the year. Instead of a single "lump" payment, a member can pay $1,600 at the start of the year and defer the $2,000 balance for five months by paying a $75 surcharge at the time of the second payment. Effectively, what annual rate of simple interest is Oak Meadows charging on the $2,000 deferred payment?

Accepted Answer

The answer of The annual $3,600 membership fee at the...

Question 20

How long will it take for an investment of $9,000 at 3.75% to earn interest of $250?

Accepted Answer

A)  74 days 
B)  163 days 
C)  218 days 
D)  270 days 
E)  741 days

Exam 6: Simple Interest

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

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:

Maurice borrowed $6,000 from Heidi on April 23 and agreed to make payments of $2,000 on June 1 and $2,000 on August 1, and to pay the balance on October 1. If simple interest at the rate of 10% was charged on the loan, what is the amount of the third payment?

A late payment of $850.26 was considered equivalent to the originally scheduled payment of $830.00, allowing for interest at 9.9%. How many days late was the payment?

Calculate the amount of interest that would be earned on an account of $59,500 at 7.2% for 133 days.

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.

How much money would have to be deposited on March 11 into an account earning a simple interest rate of 9.5% if the goal is to have the deposit grow to $12,000 by November 1?

Kris has borrowed $2,000 and has agreed to repay the loan in two payments in nine and fifteen months. Each payment is $1,000 of principal and interest at the rate of 7%. Kris wants to settle the debt in six months. What single equivalent payment should she make if money is now worth 5%?

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

What was the principal amount of a loan at 9.5% if $67.78 of interest accrued from October 28, 2013 to April 14, 2014?

A payment stream consists of three payments: $1000 today, $1500 in 70 days, and $2000 in 210 days. What single payment, 60 days from now, is economically equivalent to the payment stream if money can be invested at a rate of 8.5%?

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.

Calculate the missing value:

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:

Sam has won a lottery. He can take $5,000 now or $5,500 in one year. If money can earn 8%, which option should he choose?

A contract was signed eight months ago requiring the payment of $13,000 plus interest at 8% after one year. What two equal payments made today and four months from today are equivalent to the original contract? Assume that money is now worth 5%. Use four months from today as the focal date.

Calculate the missing value:

How long will it take for an investment of $9,000 at 3.75% to earn interest of $250?