Question 1

Petra has forgotten the rate of simple interest she earned on a 120-day term deposit at Scotiabank. At the end of the 120 days, she received interest of $327.95 on her $21,000 deposit. What rate of simple interest was her deposit earning?

Accepted Answer

The answer of Petra has forgotten the rate of simple...

Question 2

The bookkeeper for Durham's Garage is trying to allocate to principal and interest a payment that was made to settle a loan. The cheque stub has the note "$3,701.56 for principal and 7 months' interest at 12.5%." What are the principal and interest components of the payment?

Accepted Answer

The answer of The bookkeeper for Durham's Garage is trying...

Question 3

If money if worth $985 now and $1005 in two months, determine the rate of return that an investor would be indifferent between the two options.

Accepted Answer

A)  15.41% 
B)  14.62% 
C)  13.83% 
D)  12.18% 
E)  13.44%

Question 4

Frankie's Furniture Mart has contracts from one customer who will pay $4,695 in 5 months and another customer who will pay $7,830 in 7 months. Frankie can sell the contracts today to Vinnie's finance company at a discount rate of 23.5%. How much money will Vinnie pay to Frankie today for the two contracts?

Accepted Answer

A)  $11,162 
B)  $11,208 
C)  $12,525 
D)  $13,705 
E)  $14,058

Question 5

Asher cashed in a one-year term deposit after only five months had elapsed. In order to do so, he accepted an interest rate penalty-a reduction from the scheduled 5.5% rate of simple interest. If he was paid $145.83 interest on the $10,000 term deposit, what reduction was made in the per-annum rate of simple interest?

Accepted Answer

The answer of Asher cashed in a one-year term deposit...

Question 6

If money if worth $1,500 now and $1,540 in 90 days, determine the rate of return that an investor would be indifferent between the two options.

Accepted Answer

A)  12.45% 
B)  11.23% 
C)  10.81% 
D)  9.63% 
E)  8.85%

Question 7

If money earns 7.5%, calculate and compare the economic value today of the following payment streams:
a) Payments of $1,800 and $2,800 made 150 and 90 days ago, respectively.
b) Payments of $1,600, $1,200, and $2,000 due 30, 75, and 120 days from now, respectively.

Accepted Answer

The answer of If money earns 7.5%, calculate and compare...

Question 8

A $6,000 loan at 8% is to be repaid in three equal payments at three months, six months, and nine months. Determine the size of the equal payments.

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Question 9

Fred puts $5,475 into a term deposit on May 15th. The deposit earns a simple interest rate of 4%. If the term deposit will mature on August 14th, how much interest will Fred earn?

Accepted Answer

A)  $35.40 
B)  $24.80 
C)  $36.00 
D)  $36.60 
E)  $54.60

Question 10

At what simple annual interest rate would $1,896 grow to $2,000 in 300 days?

Accepted Answer

A)  6.7% 
B)  8.5% 
C)  7.8% 
D)  5.5% 
E)  6.3%

Question 11

How much interest could you earn, over 5 months on an investment of $94,000 at 17.75%?

Accepted Answer

A)  $39,167 
B)  $6,952 
C)  $8,342 
D)  $993 
E)  $4,216

Question 12

Indira paid interest charges of $169.05 on a $4830 invoice that was two months overdue. What monthly rate of simple interest was she charged?

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Question 13

The original $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.

Accepted Answer

The answer of The original $3,000 loan was advanced on...

Question 14

If the maturity value of an investment which paid 13.9% was $400,000 after 7 months, how much of that amount was interest?

Accepted Answer

A)  $30,001 
B)  $55,600 
C)  $32,433 
D)  $67,888 
E)  $27,999

Question 15

What should be the amount of each payment if a $2500 loan at 8.75% is to be repaid by three equal payments due two months, four months, and seven months following the date of the loan?

Accepted Answer

The answer of What should be the amount of each...

Question 16

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:

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Question 17

A $1000 loan at 3% was repaid by two equal payments made 30 days and 60 days after the date of the loan. Determine the amount of each payment.

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Question 18

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 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

Calculate the missing value:

Accepted Answer

The answer of Calculate the missing value: ...

Exam 6: Simple Interest