Deck 6: Simple Interest

Question 1

How much interest was paid on a $1500 loan for seven months at an annual interest rate of 9.5%?

Answer 1

$83.13

Question 2

Montel loaned $6800 to a friend for 13 months at an annual rate of 7.7% simple interest. How much interest did the borrower owe?

Answer 2

$567.23

Question 3

A $25,000 investment earned 1.1% per month simple interest for a three-month term. What total amount of interest was earned?

Answer 3

$825.00

Question 4

What was the term of a $4850 loan at 4.5% if the interest due at the end was $145.50?

Question 5

The interest paid at the end of the term of a $9125 loan at 0.8% per month was $511.00. Calculate the term of the loan.

Question 6

The interest paid on an 11-month loan at 10¼ % was $328.85. What was the principal amount of the original loan?

Question 7

What annual rate of interest was earned if a $15,000 investment for five months earned $546.88 in interest?

Question 8

$890 interest was charged on $8900 borrowed on a simple interest basis for eight months. What was the interest rate per month on the loan?

Question 9

How much interest will be earned on $5000 in 5 months if the interest rate is 5.5%?

Question 10

A five-month term deposit of $10,000 at the Scotiabank earned $175 in interest. What annual rate of simple interest did the deposit earn?

Question 11

Sumer put $10,000 in a 3-month term deposit at Canada Trust, earning a simple interest rate of 3.9%. After the 3 months, she invested the entire amount of the principal and interest from the first term deposit in a new 3-month term deposit earning the same rate of interest. How much interest did she earn on each term deposit? Why are the two interest amounts not equal?

Question 12

Sergon has $5000 to invest for six months. The rates offered on three-month and six-month term deposits at his bank are 5.5% and 5.8%, respectively. He is trying to choose between the six-month term deposit and two consecutive three-month term deposits. What would the simple interest rate on three-month term deposits have to be, three months from now, for Sergon to end up in the same financial position with either alternative? Assume that he would place both the principal and interest from the first three-month term deposit in the second three-month term deposit.

Question 13

A $3800 loan at 10¾ % was advanced on June 17, 2011. How much interest was due when the loan was repaid on October 1, 2011?

Question 14

How much interest accrued from November 30, 2010 to March 4, 2011 on a $7350 loan at 7.5%?

Question 15

An $85,000 investment earned a 6.9% rate of simple interest from December 1, 2010 to May 30, 2011. How much interest was earned?

Question 16

$850 borrowed on January 7, 2008 was repaid with interest at an annual rate of 7% on July 1, 2008. What was the amount of interest?

Question 17

The interest rate on $27,000 borrowed on October 16, 2011 was 8.7%. How much interest was owed on the April 15, 2012 repayment date?

Question 18

A $14,400 loan taken out on May 21, 2010 was repaid with interest at 11¼ % per annum on July 19, 2011. How much interest was paid?

Question 19

If $40.52 interest accrued on a $1000 certificate of deposit from January 15, 2008 to July 7, 2008, what rate of simple interest did the certificate of deposit earn?

Question 20

What was the principal amount of a loan at 9½ % if $67.78 of interest accrued from October 28, 2010 to April 14, 2011?

Question 21

On June 26 Laura put $2750 into a term deposit until September 3, when she needs the money for tuition, books, and other expenses to return to college. For term deposits in the 60-89-day range, her credit union pays an interest rate of 4¼ %. How much interest will she earn on the term deposit?

Question 22

Raimo borrowed $750 from Chris on October 30 and agreed to repay the debt with simple interest at the rate of 12.3% on May 10. How much interest was owed on May 10? Assume that February has 28 days.

Question 23

On June 26, 2011, $1000 was borrowed at an interest rate of 10¾ %. On what date was the loan repaid if the amount of accrued interest was $63.91?

Question 24

$1000 was invested on April 18, 2011 in a certificate of deposit earning 7.7% per annum. On its maturity date, the certificate paid $32.28 interest. On what date did it mature?

Question 25

On what date was a $1000 loan granted if the interest accrued as at November 16, 2011 was $50.05? The interest rate on the loan was 7¼ %.

Question 26

The $1000 principal amount of a loan was repaid on March 13, 2011 along with accrued interest in the amount of $49.42. If the interest rate on the loan was 11%, what was the repayment date?

Question 27

Bruce borrowed $6000 from Darryl on November 23. When Bruce repaid the loan, Darryl charged $203.22 interest. If the rate of simple interest on the loan was 10¾ %, on what date did Bruce repay the loan? Assume that February has 28 days.

Question 28

Sharon's $9000 term deposit matured on March 16, 2008. 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?

Question 29

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 8¾ %, rose to 9% effective July 1, and increased another ½ % effective July 31, what was the principal amount of the loan?

Question 30

What will be the maturity value after seven months of $2950 earning interest at the rate of 4½ %?

Question 31

$12,800 was invested in a 237-days term deposit earning 3¾ %. What was its maturity value?

Question 32

What was the principal amount of a loan at 10½ % if total amount owed after 23 days was $785.16?

Question 33

$7348.25 was the amount required to pay off a loan after 14 months. If the loan was at 8¼ % per annum simple interest, how much of the total was interest?

Question 34

The amount required to settle a $680 debt after 300 days was $730.30. What rate of interest was charged on the debt?

Question 35

Janesh has savings of $9625.63. If he can invest this amount to earn 7.8%, how many days will it take for the investment to grow to $10,000?

Question 36

The amount required to pay off a $3500 loan at 8.4% was $3646.60. What was the term (in days) of the loan?

Question 37

A $7760 investment earning 6¼ % matured at $8083.33. What was the term (in months) of the investment?

Question 38

The interest rate on an $859.50 debt was 10¼ %. For how many months was the loan outstanding if it was settled with a payment of $907.22?

Question 39

The snow tires that you are planning to buy next October 1 at the regular price of $107.50 each are advertised at $89.95 in a spring clearance special that will end on the preceding March 25. What annual rate of simple interest will you earn if you "invest"
in the new snow tires at the sale price on March 25 instead of waiting until October 1 to buy them at the regular price?

Question 40

The cash balance in Amalia's account with her stockbroker earns interest on the daily balance at an annual rate of 4%. Accrued interest is credited to her account every six months-on June 30 and December 31. As a result of the purchase and sale of securities from time to time, the account's balance changed as follows:
What interest was credited to Amalia's account on June 30? The brokerage firm includes interest for both January 1 and June 30 in the June 30 payment. Assume that February had 28 days.

Question 41

Dominion Contracting invested surplus funds in term deposits. All were chosen to mature on April 1 when the firm intends to purchase a new grader.
What total amount will be available from the maturing term deposits on April 1 (of a leap year)?

Question 42

What amount of money paid today is equivalent to $560 paid five months from now if money can earn 10¾ % per annum?

Question 43

What amount, seven months from now, is equivalent to $1215 today if money can be invested to earn 8½ %?

Question 44

What payment, 174 days from now, is equivalent to $5230 paid today? Assume that money is worth 9.25% per annum.

Question 45

What amount should be accepted as equivalent, 60 days before an obligation of $1480 is due, if money can earn 6¾ %?

Question 46

What amount paid on September 24 is equivalent to $1000 paid on the following December 1 if money can earn 5%?

Question 47

What amount received on January 13 is equivalent to $1000 received on the preceding August 12 if money can earn 9.5%?

Question 48

Rasheed wishes to postpone for 90 days the payment of $450 that he owes to Roxanne. If money now earns 6.75%, what amount can he reasonably expect to pay at the later date?

Question 49

Avril owes Value Furniture $1600, which is scheduled to be paid on August 15. Avril has surplus funds on June 15 and will settle the debt early if Value Furniture will make an adjustment reflecting the current short-term interest rate of 7.25%. What amount should be acceptable to both parties?

Question 50

What is the time interval (in months) separating equivalent payments of $3500.00 and $3439.80 if money is worth 5¼ % per annum?

Question 51

An early payment of $4574.73 was accepted instead of a scheduled payment of $4850.00, allowing for interest at the rate of 8¾ %. How many days early was the payment?

Question 52

How many days separate equivalent payments of $2755.20 and $2740.00 if money can earn 4½ %?

Question 53

If money can be invested at 0.6% per month, which has the greater economic value: $5230 on a specific date or $5500 exactly five months later? At what rate (per month) would the two amounts be economically equivalent?

Question 54

Compare the economic values of $1480 today vs. $1515 in 150 days. Assume money can earn 6.75%. At what rate would the two amounts be equivalent?

Question 55

To settle a $570 invoice, Anna can pay $560 now or the full amount 60 days later. Which alternative should she choose if money can earn 10¾ %? What rate would money have to earn for Anna to be indifferent between the alternatives?

Question 56

Jonas recently purchased a one-year membership at Gold's Gym. He can add a second year to the membership now for $1215, or wait 11 months and pay the regular single-year price of $1280. Which is the better economic alternative if money is worth 8.5%? At what rate would the alternatives be equivalent?

Question 57

During its 50-50 Sale, Marpole Furniture will sell its merchandise for 50% down, with the balance payable in six months. No interest is charged for the first si months. What 100% cash price should Marpole accept on a $1845 chesterfield and chair set if Marpole can earn a rate of return of 10.75% on its funds?

Question 58

Calculate the combined equivalent value, six months from now, of $500 due today and $300 due in three months. Assume that money can earn 9½ %.

Question 59

A payment stream consists of $1000 payable today and $1500 payable in five months. What is the equivalent value of the payment stream two months from now if money is worth 5.5%?

Question 60

Payments of $900 and $1000 are due in 30 days and 210 days, respectively. If money can be invested at 7¾ %, what single payment 90 days from now is equivalent to the payment stream?

Question 61

What is the equivalent value, 30 days from now, of a payment stream comprised of $2500 due in 70 days and $4000 due in 200 days? Assume money can earn 6¼ %.

Question 62

Payments of $850 and $1140 were scheduled to be paid today and nine months from now, respectively. What total payment today would place the payee in the same financial position as the scheduled payments? Money can earn 8¼ %.

Question 63

Two payments of $1300 and $1800 were scheduled to be paid five months ago and three months from now, respectively. The $1300 payment has not yet been made. What single payment at a focal date one month from now would be equivalent to the two scheduled payments if money can earn 4½ %?

Question 64

A $3000 loan at 11% was made on March 1. Two payments of $1000 each were made on May 1 and June

Question 65

$5000 was borrowed at 9½ % on March 1. On April 1 and June 1, the borrower made payments of $2000 each. What payment was required on August 1 to pay off the loan's balance?

Question 66

The interest rate on a $3000 loan advanced on March 1 was 10.2%. What must the first payment on April 13 be in order that two subsequent payments of $1100 on May 27 and $1100 on July 13 settle the loan?

Question 67

A $3000 loan on March 1 was repaid by payments of $500 on March 31, $1000 on June 15, and a final payment on August 31. What was the third payment if the interest rate on the loan was 8¼ %?

Question 68

A $1000 loan at 9% was repaid by two equal payments made 30 days and 60 days after the date of the loan. Determine the amount of each payment.

Question 69

Two equal payments, 50 days and 150 days after the date of the loan, paid off a $3000 loan at 10¼ %. What was the amount of each payment?

Question 70

What should be the amount of each payment if a $2500 loan at 8¾ % is to be repaid by three equal payments due two months, four months, and seven months following the date of the loan?

Question 71

$8000 was borrowed at an interest rate of 11½ %. Calculate the amount of each payment if the loan was paid off by three equal payments made 30, 90, and 150 days after the date of the loan.

Question 72

A loan of $4000 at 13% is to be repaid by three equal payments due four, six, and eight months after the date on which the money was advanced. Calculate the amount of each payment. Use the loan date as the focal date.

Question 73

Anthony borrowed $7500 on September 15 and agreed to repay the loan by three equal payments on the following November 10, December 30, and February 28. Calculate the payment size if the interest rate on the loan was 11¾ %. Use September 15 as the focal date.

Question 74

What amount invested at 4½ % on November 19, had a maturity value of $10,000 on March 3 of the following year?

Question 75

If $3702.40 earned $212.45 interest from September 17, to March 11 of the following year, what rate of interest was earned?

Question 76

A loan of $3300 at 9¼ % simple interest was made on March 27. On what date was it repaid if the interest cost was $137.99?

Question 77

Marta borrowed $1750 from Jasper on November 15, 2004, and agreed to repay the debt with simple interest at the rate of 7.4% on June 3, 2005. How much interest was owed on June 3?

Question 78

Jacques received the proceeds from an inheritance on March 15. He wants to set aside, in a term deposit on March 16, an amount sufficient to provide a $45,000 down payment for the purchase of a home on November 1. If the current interest rate on 181-day to 270-day deposits is 5¾ %, what amount should he place in the term deposit?

Question 79

Sheldrick Contracting owes Western Equipment $60,000 payable on June 14. In late April, Sheldrick has surplus cash and wants to settle its debt to Western Equipment, if Western will agree to a fair reduction reflecting the current 3.6% interest rate that short-term funds can earn. What amount on April 29 should Sheldrick propose to pay to Western?

Question 80

What amount on January 23 is equivalent to $1000 on the preceding August 18 if money can earn 6½ %?