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Exam 6: Simple Interest

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Question 61

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What is meant by the "present value" of a payment that is scheduled for a future date?

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The "present value" ...

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Question 62

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Ethel invested $3,450 of Fred's money on February 3. Lucy had promised Ethel that the investment would earn an interest rate of 55%. On February 27 of the same year, Ethel cashed in her investment and received the interest as Lucy had promised. How much interest had she earned?

A) $124.77
B) $189.75
C) $218.63
D) $64.98
E) $90.87

F) A) and D)
G) C) and D)

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Question 63

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Rasheed wishes to postpone for 90 days the payment of $450 that he owes to Roxanne. If money now earns 4.75%, what amount can he reasonably expect to pay at the later date?

Sharon's $9,000 term deposit matured on March 16, 2014. Based on a simple interest rate of 3.75%, she received $110.96 in interest. On what date did she originally make the term deposit?

How much must be placed in a two-month term deposit earning 4.8% in order to earn $275 interest?

How many months would it take to earn $3,570 on a deposit of $84,000 earning 8 ½%?

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

Calculate the missing value:

A five-month term deposit of $10,000 at the Scotiabank earned $75 in interest. What annual rate of simple interest did the deposit earn?

A $10,000 90-day term deposit earns 4.5% interest. How much will the depositor have at maturity?

A department store is offering a washer/dryer for $1480 now or can pay $1500 in 120 days. If interest is 8.52%, determine whether a customer should purchase now or in 120 days.

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.

Payments of $900 and $1000 are due in 30 days and 210 days respectively. If money can be invested at 7.75% what single payment 90 days from now is equivalent to that payment stream?

The maturity value of an investment earning 7.7% per annum for a 360 day term was $2291.01. What amount was originally invested?

Payments of $2,500 due now and $6,500 due in 90 days are to be replaced by a $4,000 payment due in 120 days and a final payment due in 180 days from now. If interest is 5.5% annually, determine the value of the final payment if the focal point is 180 days from now.

Calculate the combined equivalent value in five months from now of a payment stream consisting of $1000 payable today and $1500 payable in five months? Assume money can earn 5.5%.

The total accrued interest owed as of August 31 on a loan advanced the preceding June 3 was $169.66. If the variable interest rate started at 8.75%, rose to 9% effective July 1, and increased another 0.5% effective July 31, what was the principal amount of the loan?

A large retail store offers a payment plan of no interest with 50% down and the balance in six months on a minimum purchase of $500. If money can earn 3.25%, how much of a discount should a buyer receive on a purchase of $2,000 if paid in full at the time of purchase?

Carly borrowed $450 from Jenn on August 24 at an interest rate of 11%. On January 11 of the following year, Carly repaid the loan with interest. How much interest should she have paid?

On May 27, Kristina made an investment that earned an interest rate of 9.4%. By November 6 the investment's value had increased to $77,000. What amount of interest had Kristina earned?