Question 1

Caprice buys a painting on his credit card for $14 990.She pays her credit card in full 3 days after the grace period of 11 days using her secured line of credit,which charges her prime plus 1%.She repays her loan in 168 days.The prime rate is 2.5% on the day of repayment of credit card loan and increases to 3% 90 days after that day.If her credit card company charges her a rate of 28% after the grace period,what is the total amount of interest paid on the purchase of the painting?

Accepted Answer

Interest paid to the credit card = $14 990 × 0.28 ×  = $160.99 Total payment to the credit card using secured line of credit = $14 990 + $160.99 = $15 150.99 Interest rate for first 90 days = 3.5% Interest rate for (168-90)= 78 days = 4% Interest paid to the secured line of credit = $15 150.99 × 0.035 ×  + $15 150.99 × 0.04 ×  = $260.26 Total interest paid on the purchase of the painting = $160.99 + $260.26 = $421.25

Question 2

The owner of Easy Clips borrowed $8800.00 from Red Deer Community Credit Union on June 17.The loan was secured by a demand note with interest calculated on the daily balance and charged to the store's account on the 5th day of each month.The loan was repaid by payments of $2500.00 on July 25,$2300.00 on October 17,and $3500.00 on December 30.The rate of interest charged by the credit union was 6.5% on June 17.The rate was changed to 6.65% effective July 1 and to 6.95% effective November 1.Determine the total interest cost on the loan,up to and including Dec.30.

Accepted Answer

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Question 3

Zahid purchased a large-screen TV at a local store in December,that had advertised,"No payment for 6 months." Amount to be paid after 6 months is $1495 plus HST (13%)plus an administration fee of $79.If money is worth 2.5%,what is the actual cost of the TV to Zahid on the day of the purchase?

Accepted Answer

A)  $1746.52
B)  $1790.45
C)  $1476.54
D)  $1554.57
E)  $1768.35 A

Question 4

What is the face value of a three-month promissory note dated July 30,2013,with interest at 6.5 percent if its maturity

Accepted Answer

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Question 5

A six-month promissory note dated November 8,2013 is made at 6% for $2900.00.What is the present value of the note thirty-eight days later if money is worth 7.2%?

Accepted Answer

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Question 6

You borrow $4000 on August 2nd this year.Your demand loan carries an interest rate of 8.41%.You make partial payments of $500 on September 15th and $1575 on October 17th.You want to make a final payment to pay off the remaining outstanding balance on November 21st.What is the size of your final payment? Use the declining balance method.

Accepted Answer

A)  $2080.18
B)  $2018.80
C)  $2208.18
D)  $2007.72
E)  $2777.72

Question 7

The maturity value of a 155-day 7.5% note dated March 14 is $1721.74.Compute the face value of the note.

Accepted Answer

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Question 8

Find the maturity value of a six-month,$642 note dated November 1,2013,earning interest at 7.5%.

Accepted Answer

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Question 9

Determine the maturity value of a 120-day note for $2260.00 dated May 9 and bearing interest at 5.66%.

Accepted Answer

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Question 10

Find the proceeds of a six-month note for $966 dated September 16,2012,with interest at 5.45% if money is worth 5.75% on November 4,2012.

Accepted Answer

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Question 11

Find the present value and the amount of discount for a four-month non-interest-bearing note for $9 180 issued December 2,2014,if money is worth 7.2% on February 28,2015.

Accepted Answer

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Question 12

Find the maturity value of a $1190,7.275%,120-day note dated February 5,2013.

Accepted Answer

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Question 13

Average rate of return or yield on 180-day Government of Canada treasury bills sold on June 18,2013 was 1.04%.The client sold the $50 000 T-bill after 39 days.What rate of return (per annum)did the client realize while holding the T-bill,if the short term interest for this maturity had risen to 1.13% by the date of sale?

Accepted Answer

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Question 14

A promissory note has a face value of $1725 and it has a date of issue of October 1 this year.The term is for 4 months.The rate of interest is 6.13%.What is the legal due date of the promissory note?

Accepted Answer

A)  Feb.1
B)  Feb.2
C)  Feb.3
D)  Feb.4
E)  Feb.5

Question 15

Islamic banking is being introduced in Oman,such that no interest is given on the promissory notes.Compute the present value on the date of issue of a non-interest-bearing,worth $850 000,three-month promissory note dated September 1,2013 (plus 3 days of grace),if money is worth 12.5% in Oman.

Accepted Answer

A)  $824 311
B)  $847 272
C)  $877 363
D)  $823 490
E)  $26 510

Question 16

An investment dealer bought a 182-day Government of Canada treasury bill at the price required to yield an annual rate of return of 3.38%
a)What was the price paid by the investment dealer if the T-bill has a face value of $1 000 000?
b)Later the same day,the investment dealer sold this T-bill to a large corporation to yield 3.25%.What was the investment dealer's profit on this transaction?

Accepted Answer

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Question 17

Calculate the maturity value of a 180-day note for $4000 dated August 18 if the rate of interest is 7.5%.

Accepted Answer

A)  4147.95
B)  4150.41
C)  5479.45
D)  5504.11
E)  4440.41

Question 18

Find the present value of a seven-month note for $3940 dated April 1 with interest at 7.45% if money is worth 6%,on

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Question 19

Dirk Propp borrowed $14 300.00 for investment purposes on May 19 on a demand note providing for a variable rate of interest and payment of any accrued interest on December 31.He paid $1300.00 on June 28,$1450 on September 25,and $4200.00 on November 15.How much is the final payment on December 31 if the rate of interest was 11.5% on May 19,8.21% effective August 1,and 6.35% effective November 1? Use the declining balance method.

Accepted Answer

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Question 20

Marty took a $5000 loan from a financial institute at a rate of 6%,which should be repaid in two equal installments made every 4 months.What should be the value of the installment?

Accepted Answer

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Exam 8: Simple Interest Applications

Zahid purchased a large-screen TV at a local store in December,that had advertised,"No payment for 6 months." Amount to be paid after 6 months is $1495 plus HST (13%) plus an administration fee of $79.If money is worth 2.5%,what is the actual cost of the TV to Zahid on the day of the purchase?