Deck 9: Simple Interest

Question 1

Find the exact interest to the nearest cent.
$99,000 at 7% for 135 days

A)$2,620.11
B)$2,598.75
C)$2,563.15
D)$2,656.50

Answer 1

$2,563.15

Question 2

Answer the question.
Acme Manufacturing Company needs to borrow $150,000.00 for 50 days to pay creditors. One way to get the money would be by way of a simple interest note with a rate of 8% and a principal of $150,000.00. At what discount rate would a simple discount note with proceeds of $150,000.00 have to be given to match the simple interest note? Round to the nearest ten-thousandths of a percent.

Answer 2

7.9121%

Question 3

Answer the question.
Under what circumstances would a business consider discounting a note?

Answer 3

A business would consider discounting a note if it needs money now, before the note becomes due and has no other options.

Question 4

Solve the problem. Round dollar amounts to the nearest cent. Use ordinary interest unless otherwise indicated.
HarbourTown Marina purchased four boat lifts for raising and lowering large boats into the water. The boat lifts cost $59,700 each. They borrowed the money from the bank for 240 days at 8%. Find
The maturity value.

A)$251,536.00
B)$64,476.00
C)$257,904.00
D)$62,884.00

Question 5

Answer the question.
Explain how to find the effective interest rate for a simple discount note.

Question 6

Answer the question.
In your own words, define collateral. Give an example.

Question 7

Answer the question.
What is a simple discount note? Explain in your own words by way of a specific example.

Question 8

Find the discount period.
Loan made: Aug 17
Length of loan: 240 days
Date of discount: Dec 11

A)115 days
B)124 days
C)125 days
D)116 days

Question 9

Find the maturity value of the simple interest note.
Face Value: $4,492
Length of Loan: 113 days
Rate: 10%

A)$4,634.98
B)$4,629.84
C)$4,633.00
D)$4,632.30

Question 10

Find the date due and the maturity value. Use banker's interest.

A)Date Due: March 19
Maturity value: $9.35
B)Date Due: March 20
Maturity value: $9.81
C)Date Due: March 20
Maturity value: $9.21
D)Date due: March 19
Maturity value: $9.46

Question 11

Find the date due and the maturity value. Use banker's interest.

A)Date Due: April 21
Maturity value: $16,972.20
B)Date Due: April 20
Maturity value: $16,729.74
C)Date Due: April 21
Maturity value: $16,535.77
D)Date due: April 20
Maturity value: $16,616.59

Question 12

Find the principal. Round to the nearest cent.
Rate: 8%
Time: 80 days
Interest: $1,564.26

A)$88,039.63
B)$87,989.63
C)$8,798.96
D)$80

Question 13

Solve the problem.
On June 7, Donaldson's Trucking accepts a $3,200 note in settlement of a bill. The note is for 180 days at 8% interest. Donaldson sells the note at a 10% discount rate on July 29. Find the proceeds.

A)$3,208.75
B)$3,209.67
C)$3,233.34
D)$3,174.01

Question 14

Find the discount period.
Loan made: Oct 27
Length of loan: 210 days
Date of discount: Jan 25

A)90 days
B)91 days
C)119 days
D)120 days

Question 15

The simple interest note was discounted at 15%. Find the discount period in days and the proceeds.
Loan made: Jan 7
Face value: $2,600
Length of loan: 120 days
Rate: 12%
Date of discount: Mar 7

A)61 days, $2,545.92
B)61 days, $2,531.27
C)61 days, $2,635.27
D)60 days, $2,649.92

Question 16

Find the exact interest to the nearest cent.
$4,900 at 5% for 189 days

A)$128.63
B)$126.86
C)$12.69
D)$12.86

Question 17

Solve the problem.
Henry Smith buys a $60,000 T-bill at a 6.9% discount for 30 weeks. Find the purchase price of the T-bill. (Assume 52 weeks per year.)

A)$55,223.08
B)$57,611.54
C)$58,805.77
D)$57,372.69

Question 18

Solve the problem. Round rates to the nearest tenth of a percent, dollar amounts to the nearest cent, and time to the nearest day.
A $8,090 note is signed, for 70 days, at a discount rate of 9.5%. Find the proceeds.

A)$7,940.56
B)$7,942.61
C)$8,090.00
D)$7,321.45

Question 19

Answer the question.
You are going to borrow $71,500.00 for 72 days. You are to be loaned the money at an interest rate of 9%, and you are given the option to choose exact or ordinary interest. Which would you choose? Explain.

Question 20

Answer the question.
When using a diagram to determine the proper formula for finding principal, interest, rate, and time, is it necessary to put the I on top and P, R, and T on the bottom? Explain.

Question 21

Answer the question about the promissory note given.
-----------------------Promissory Note------------------------ March 12
Ninety days after date above, I promise to pay to the order of Thomas Ronney $590 dollars and no
Cents with interest at 12% per year, payable at Nations Bank Abercorn Branch.
Due: June 10 Signed: Fred Nester
--------------------------------------------------------------
Who is the payer of the note?

A)Nations Bank Abercorn Branch
B)Not given
C)Thomas Ronney
D)Fred Nester

Question 22

Find the time (in days). Round to the nearest day.
Principal: $2,019
Rate: 8.5%
Interest: $64.83

A)136 days
B)38 days
C)138 days
D)204 days

Question 23

Solve the problem. Round dollar amounts to the nearest cent. Use ordinary interest unless otherwise indicated.
Continental Tools bought a new computer system. To pay for the system, they borrowed $28,120 from the bank at % interest for 125 days. Find the interest.

A)$956.86
B)$943.75
C)$2,755.76
D)$949.21

Question 24

Find principal to the nearest dollar, rate to the nearest tenth of a percent, or time to the nearest day. Use banker's interest.
ABF Freight Systems earned $420.00 interest in 210 days from an investment that paid 4%. Find the amount initially invested.

A)$182,500
B)$10,500
C)$9,000
D)$18,000

Question 25

Solve the problem. Round dollar amounts to the nearest cent. Use ordinary interest unless otherwise indicated.
Chris Owens bought a new computer system. To pay for the system, he borrowed $3,290 from the credit union at interest for 110 days. Find the interest.

A)$102.93
B)$102.46
C)$339.97
D)$103.88

Question 26

Find the ordinary interest to the nearest cent.
$3,570 at 9% for 338 days

A)$321.30
B)$301.67
C)$300.77
D)$3,871.67

Question 27

Find the rate. Round to the nearest tenth of a percent.
Principal: $1,075
Time: 18 days
Interest: $4.62

A)8.7%
B)7.7%
C)8.6%
D)4.3%

Question 28

Solve the problem.
Tech Support Associates accepts a $5,320, 7%, 240-day note for service equipment. The note is dated Sep 8. On Oct 29 the firm discounts the note at a bank, at a 9% discount rate. Find the
Proceeds.

A)$5,363.63
B)$5,305.17
C)$5,303.77
D)$5,254.90

Question 29

Find the maturity value of the simple interest note.
Face Value: $5,912
Length of Loan: 224 days
Rate: 12%

A)$5,470.57
B)$6,353.43
C)$6,359.65
D)$5,955.54

Question 30

Answer the question about the promissory note given.
-----------------------Promissory Note------------------------ March 12
Ninety days after date above, I promise to pay to the order of Thomas Ronney $610 dollars and no
Cents with interest at 13% per year, payable at Nations Bank Abercorn Branch.
Due: June 10 Signed: Fred Nester
--------------------------------------------------------------
What is the face value of the note?

A)$1.17
B)$610
C)$14.03
D)$3.51

Question 31

Solve the problem.
Twin City Freezer accepts a note with face value of $6,920 on June 1. The note is for 90 days at 8% interest. The note is discounted on July 24 at 9%. Find the proceeds.

A)$6,993.11
B)$6,991.35
C)$7,000.36
D)$6,912.36

Question 32

Find the exact number of days from the first date to the second. Assume that the second month is in the following year, and assume no leap years.
August 15 to April 6

A)233 days
B)265 days
C)234 days
D)134 days

Question 33

Answer the question about the promissory note given.
-----------------------Promissory Note------------------------ March 12
Ninety days after date above, I promise to pay to the order of Thomas Ronney $780 dollars and no
Cents with interest at 12% per year, payable at Nations Bank Abercorn Branch.
Due: June 10 Signed: Fred Nester
--------------------------------------------------------------
Who is the payee of the note?

A)Not given
B)Nations Bank Abercorn Branch
C)Thomas Ronney
D)Fred Nester

Question 34

Find the discount period.
Loan made: April 22
Length of loan: 180 days
Date of discount: July 28

A)84 days
B)97 days
C)83 days
D)96 days

Question 35

Find the principal. Round to the nearest cent.
Rate: 4.2%
Time: 300 days
Interest: $19.01

A)$1,901.00
B)$543.14
C)$593.14
D)$54.31

Question 36

Find the exact interest to the nearest cent.
$4,880 at for 175 days

A)$317.20
B)$140.38
C)$154.19
D)$152.08

Question 37

The simple interest note was discounted at 15%. Find the discount period in days and the proceeds.
Loan made: Oct 13
Face value: $21,800
Length of loan: 100 days
Rate: 10%
Date of discount: Jan 4

A)17 days, $22,246.85
B)18 days, $21,687.97
C)18 days, $22,293.53
D)17 days, $21,641.29

Question 38

Find the amount by which the ordinary interest is larger than the exact interest. Round to the nearest cent.
$91,900 at % for 84 days

A)$24.96
B)$35.46
C)$0.30
D)$15.46

Question 39

Find principal to the nearest dollar, rate to the nearest tenth of a percent, or time to the nearest day. Use banker's interest.
Hank Wilkins invested $4,400 in a mutual fund containing bonds. Find the rate given that he earned $348.33 in 300 days.

A)9.8%
B)9%
C)8.5%
D)9.5%

Question 40

The simple interest note was discounted at 15%. Find the discount period in days and the proceeds.
Loan made: Apr 18
Face value: $400
Length of loan: 150 days
Rate: 11%
Date of discount: June 18

A)90 days, $406.83
B)89 days, $384.49
C)89 days, $402.82
D)90 days, $388.50

Question 41

Find the maturity value of the simple interest note.
Face Value: $28,568
Length of Loan: 206 days
Rate: 10%

A)$30,188.16
B)$30,172.50
C)$30,225.75
D)$30,202.72

Question 42

Find the discount period.
Loan made: July 11
Length of loan: 150 days
Date of discount: Sep 10

A)89 days
B)61 days
C)99 days
D)51 days

Question 43

The simple interest note was discounted at 15%. Find the discount period in days and the proceeds.
Loan made: Oct 13
Face value: $52,000
Length of loan: 100 days
Rate: 11%
Date of discount: Jan 4

A)17 days, $51,620.41
B)18 days, $53,294.15
C)18 days, $51,705.26
D)17 days, $53,209.30

Question 44

Solve the problem. Round rates to the nearest tenth of a percent, dollar amounts to the nearest cent, and time to the nearest day.
Sam Peters signs a $4,500 note. His bank charges a 10% discount rate. Find the effective rate charged by the bank if the note is for 9 months.

A)9.7%
B)10.9%
C)10%
D)10.8%

Question 45

Find the proceeds to the nearest cent when the following is discounted.
Maturity value: $8,000
Discount period: 90 days
Discount rate: 8.5%

A)$7,320.00
B)$7,420.00
C)$7,830.00
D)$7,832.33

Question 46

Find the date due and the maturity value. Use banker's interest.

A)Date Due: September 18
Maturity value: $9,359.43
B)Date Due: September 18
Maturity value: $9,432.62
C)Date Due: September 19
Maturity value: $9,899.22
D)Date due: September 18
Maturity value: $9,538.02

Question 47

Solve the problem.
Central Building Company borrowed $18,722 on a 94-day simple interest note to expand their business. The note carried an interest rate of 7.9%. Find the maturity value of the note.

A)$19,113.63
B)$19,108.19
C)$18,760.09
D)$18,335.81

Question 48

Solve the problem. Round dollar amounts to the nearest cent. Use ordinary interest unless otherwise indicated.
On October 12, Marge Smith paid a state income tax payment, which was due on June 30. The penalty was 10% simple interest on her unpaid tax of $641. Find the penalty using exact interest.

A)$18.44
B)$18.52
C)$18.26
D)$17.91

Question 49

Find the rate. Round to the nearest tenth of a percent.
Principal: $8,000
Time: 90 days
Interest: $140.00

A)34.6%
B)7.0%
C)7.1%
D)1.8%

Question 50

Find the interest and maturity value for the loan. Round to the nearest cent.
$10,593 at 6.9% for 9 months

A)$552.79; $11,145.79
B)$548.19; $11,141.19
C)$609.10; $11,202.10
D)$487.28; $11,080.28

Question 51

Find the exact number of days from the first date to the second. Assume that the second month is in the following year, and assume no leap years.
April 24 to February 22

A)305 days
B)290 days
C)303 days
D)304 days

Question 52

Find the principal. Round to the nearest cent.
Rate: 4%
Time: 150 days
Interest: $63.77

A)$382.62
B)$6,377.00
C)$3,876.20
D)$3,826.20

Question 53

First, find the initial proceeds of the simple discount note. Then, find the discount period, the discount, and proceeds after discounting.
Date Loan Was Made: Jan. 19
Maturity Value: $20,000
Length of Loan: 60 days
Rate: 10%
Date of Discount: Mar. 7
Discount %: 10%

A)Initial Proceeds: $19,666.67;
Discount Period: 13 days;
Discount: $355.56;
Proceeds After Discount: $39,927.78
B)Initial Proceeds: $39,666.67;
Discount Period: 15 days;
Discount: $344.44;
Proceeds After Discount $39,927.78
C)Initial Proceeds: $19,666.67;
Discount Period: 13 days;
Discount: $72.22;
Proceeds After Discount: $19,927.78
D)Initial Proceeds: $59,666.67;
Discount Period: 15 days;
Discount: $411.11;
Proceeds After Discount: $59,927.78

Question 54

Find the time (in days). Round to the nearest day.
Principal: $17,000
Rate: 9.5%
Interest: $942.08

A)210 days
B)58 days
C)315 days
D)213 days

Question 55

Find principal to the nearest dollar, rate to the nearest tenth of a percent, or time to the nearest day. Use banker's interest.
Central Animal Hospital borrowed $8,300 for 75 days and paid $164.27 in interest. Find the rate of interest on the loan.

A)10.0%
B)9.0%
C)9.7%
D)9.5%

Question 56

Solve the problem. Round dollar amounts to the nearest cent. Use ordinary interest unless otherwise indicated.
Bob's BBQ signed a note with a face value of $18,500.00 on September 11. The note is for 90 days and carries an interest rate of 9%. Find the due date and the maturity value of the note.

A)December 10, $18,916.25
B)December 12, $18,500.00
C)December 11, $19,055.00
D)December 11, $20,165.00

Question 57

Find the exact interest to the nearest cent.
$8,500 at 7% for 125 days

A)$198.88
B)$201.64
C)$203.77
D)$206.60

Question 58

Find the maturity date and proceeds. Round to the nearest cent.
Face value: $4,500
Discount rate: 9%
Date made: May 30
Time: 90 days
Maturity date: Proceeds:

A)Maturity date: August 28
Proceeds: $4,601.25
B)Maturity date: August 28
Proceeds: $4,398.75
C)Maturity date: August 30
Proceeds: $4,601.25
D)Maturity date: August 30
Proceeds: $4,398.75

Question 59

Find the interest and maturity value for the loan. Round to the nearest cent.
$46,228 at 7.4% for 23 months

A)$6,611.77; $52,839.77
B)$6,841.74; $53,069.74
C)$6,271.60; $52,499.60
D)$6,556.67; $52,784.67

Question 60

Find the proceeds to the nearest cent when the following is discounted.
Maturity value: $97,600
Discount period: 30 days
Discount rate: 11%

A)$96,705.33
B)$86,864.00
C)$86,964.00
D)$96,717.59

Question 61

Solve the problem. Round rates to the nearest tenth of a percent, dollar amounts to the nearest cent, and time to the nearest day.
A $2,000 note is signed, for 210 days, at a discount rate of 11%. Find the proceeds.

A)$1,780.00
B)$1,873.42
C)$2,000.00
D)$1,871.67

Question 62

Find the ordinary interest to the nearest cent.
$24,470 at % for 103 days

A)$1,345.85
B)$381.32
C)$24,855.06
D)$385.06

Question 63

Find the date due and the maturity value. Use banker's interest.

A)Date due: January 27
Maturity value: $5,285.54
B)Date Due: January 27
Maturity value: $5,249.96
C)Date Due: January 28
Maturity value: $5,299.82
D)Date Due: January 28
Maturity value: $5,269.94

Question 64

Solve the problem.
The Gibralter Company loaned $7,843 for 60 days to the Hazen Company for the purchase of business supplies. The Gibralter Company sold the 7% simple interest note 44 days later at an 9%
Discount rate. Find the discount period and the discount.

A)Discount period: 16 days
Discount: $31.74
B)Discount period: 16 days
Discount: $31.30
C)Discount period: 104 days
Discount: $206.30
D)Discount period: 16 days
Discount: $31.01

Question 65

Find the proceeds to the nearest cent when the following is discounted.
Maturity value: $88,400 Discount period: 89 days
Discount rate: 9%

A)$80,544.00
B)$86,433.10
C)$86,460.04
D)$80,444.00

Question 66

Find the discount and proceeds on the simple discount note.
Face value: $5,700.00 Discount rate: 11%
Time (days): 30

A)Discount: $627.00
Proceeds: $5,073.00
B)Discount: $52.25
Proceeds: $5,647.75
C)Discount: $0.00
Proceeds: $5,700.00
D)Discount: $51.53
Proceeds: $5,648.47

Question 67

Find the discount and proceeds on the simple discount note.
Face value: $5,000.00 Discount rate: 11%
Time (days): 60

A)Discount: $91.67
Proceeds: $4,908.33
B)Discount: $0.00
Proceeds: $5,000.00
C)Discount: $550.00
Proceeds: $4,450.00
D)Discount: $90.41
Proceeds: $4,909.59

Question 68

Solve the problem. Round rates to the nearest tenth of a percent, dollar amounts to the nearest cent, and time to the nearest day.
Mark Golden needs $9,360.04 to pay for remodeling work. His bank loans money at a discount rate of 10% for 150 days. Find the face value of a loan so he will have $9,360.04.

A)$9,761.18
B)$10,296.04
C)$9,360.04
D)$9,767.00

Question 69

Answer the question about the promissory note given.
-----------------------Promissory Note------------------------ March 12
Ninety days after date above, I promise to pay to the order of Thomas Ronney $710 dollars and no
Cents with interest at 12% per year, payable at Nations Bank Abercorn Branch.
Due: June 10 Signed: Fred Nester
--------------------------------------------------------------
What is the term of the loan?

A)June 10
B)90 days
C)12% per year
D)$710 dollars and no cents

Question 70

Find the maturity date and proceeds. Round to the nearest cent.
Face value: $3,500 Discount rate:
Date made: July 15
Time: 180 days
Maturity date: Proceeds:

A)Maturity date: January 9
Proceeds: $3,329.38
B)Maturity date: January 9
Proceeds: $3,670.63
C)Maturity date: January 11
Proceeds: $3,670.63
D)Maturity date: January 11
Proceeds: $3,329.38

Question 71

Find the interest and maturity value for the loan. Round to the nearest cent.
$19,480 at 10% for 2.7 years

A)$5,064.80; $24,544.80
B)$2,768.21; $22,248.21
C)$5,259.60; $24,739.60
D)$7,207.60; $26,687.60

Question 72

Find the date due and the maturity value. Use banker's interest.

A)Date due: January 23
Maturity value: $16,553.97
B)Date Due: January 23
Maturity value: $16,857.88
C)Date Due: January 22
Maturity value: $18,006.54
D)Date Due: January 22
Maturity value: $16,727.07

Question 73

Find the exact number of days from the first date to the second. Assume that the second month is in the following year, and assume no leap years.
September 19 to March 6

A)168 days
B)172 days
C)138 days
D)167 days

Question 74

The simple interest note was discounted at 15%. Find the discount period in days and the proceeds.
Loan made: Jan 2
Face value: $9,000
Length of loan: 120 days
Rate: 11%
Date of discount: Mar 2

A)60 days, $9,158.95
B)61 days, $8,762.86
C)61 days, $9,092.86
D)61 days, $8,828.95

Question 75

Solve the problem. Round rates to the nearest tenth of a percent, dollar amounts to the nearest cent, and time to the nearest day.
Leon Harding receives proceeds of $5,095 after signing a 180-day note for $5,400. Find the discount rate.

A)11.6%
B)11.3%
C)11.7%
D)15.3%

Question 76

Answer the question about the promissory note given.
-----------------------Promissory Note------------------------ March 12
Ninety days after date above, I promise to pay to the order of Thomas Ronney $720 dollars and no
Cents with interest at 13% per year, payable at Nations Bank Abercorn Branch.
Due: June 10 Signed: Fred Nester
--------------------------------------------------------------
Who is the maker of the note?

A)Not given
B)Nations Bank Abercorn Branch
C)Fred Nester
D)Thomas Ronney

Question 77

Find the maturity value of the simple interest note.

A)$4,504.42
B)$4,509.92
C)$4,501.79
D)$4,507.13

Question 78

Find the discount and proceeds on the simple discount note.
Face value: $13,230.00 Discount rate: 9.5%
Time (days): 250

A)Discount: $872.81
Proceeds: $12,357.19
B)Discount: $1,256.85
Proceeds: $11,973.15
C)Discount: $860.86
Proceeds: $12,369.14
D)Discount: $0.00
Proceeds: $13,230.00

Question 79

Find the ordinary interest to the nearest cent.
$18,000 at 9% for 90 days

A)$405.00
B)$400.50
C)$1,620.00
D)$18,405.00

Question 80

Solve the problem.
Jerry Jones buys a $120,000 T-bill at a 5.8% discount for 30 weeks. Find the interest earned on the T-bill. (Assume 52 weeks per year.)

A)$4,416.92
B)$2,007.69
C)$4,015.38
D)$8,030.77