Deck 10: Simple Interest and Promissory Notes

Question 1

The total payback of principal and interest is known as the ____________________ of a loan.

Answer 1

maturity value

Question 2

The owner of a service station receives a loan of $8,500 at 10.5% for 7 months. Find the amount of simple interest.(Round to the nearest cent)

A) $520.63
B) $621.25
C) $489.65
D) $753.28

Answer 2

$520.63

Question 3

A store manager obtained a loan of $25,000, at $6 \frac { 3 } { 8 } \%$ interest, for 15 months to purchase supplies. Find the amount of simple interest. (Round to the nearest cent)

A) $1,992.19
B) $2,502.25
C) $1,721.13
D) $2,125.37

Answer 3

$1,992.19

Question 4

____________________ interest has become known as the banker's rule.

Question 5

____________________ are short-term government securities with maturities of 4 weeks, 13 weeks, and 26 weeks.

Question 6

Ignacio obtains a loan of $9,500, at 8.75% interest, for $9 \frac { 1 } { 2 }$ months. Find the amount of simple interest. (Round to the nearest cent)

A) $598.78
B) $658.07
C) $701.36
D) $825.55

Question 7

The time period between the date a note is discounted and the maturity date is called the ____________________ period.

Question 8

____________________ interest uses 365 days as the time factor denominator in the simple interest formula.

Question 9

The business manager of Paws and Claws Pet Supply arranges a loan of $3,500, at 6.5% interest, for 30 months. Find the amount of interest.

A) $568.75
B) $470.25
C) $335.50
D) $455.00

Question 10

Find the amount of simple interest on a loan of $3,500 at $9 \frac { 1 } { 2 } \%$ interest for 14 years.

A) $332.50
B) $387.92
C) $1,155.00
D) $4,655.00

Question 11

The amount of money that the borrower receives at the time a discounted note is made is known as the ____________________.

Question 12

The financial officer of Toys and Noise arranges a loan of $7,500, at 8.5% interest, for 33 months. Find the amount of simple interest. (Round to the nearest cent)

A) $1,560.21
B) $1,753.13
C) $8,480.21
D) $5,460.13

Question 13

The process of selling a promissory note to a bank at any time before maturity is known as ____________________ a note.

Question 14

Karen's Katering borrows $4,500, at 8.5% interest, for 260 days. If the bank uses the exact interest method, how much interest will the bank collect? (Round to the nearest cent)

A) $304.17
B) $287.95
C) $290.56
D) $272.47

Question 15

The actual interest rate charged on a discounted note is called the ____________________ interest rate.

Question 16

The amount of money being borrowed or invested is known as the ____________________.

Question 17

When a note is noninterest-bearing, the maturity value equals the ____________________.

Question 18

Find the amount of simple interest on a loan of $2,500 at 4.44% interest for 12.75 months. (Round to the nearest cent)

A) $113.31
B) $2,617.94
C) $117.94
D) $121.87

Question 19

____________________ is the rental fee charged by a lender to a business or an individual for the use of money.

Question 20

The chief business officer of a construction equipment company arranges a loan of $9,300, at $12 \frac { 1 } { 8 } \%$ interest for 37.5 months. Find the amount of interest. (Round to the nearest cent)

A) $2,761.21
B) $3,583.83
C) $3,523.83
D) $3,722.47

Question 21

Catherine borrowed $19,000 on June 20, at 10% interest. If the loan was due on September 17, what was the amount of interest on the loan using the exact interest method? (Round to the nearest cent)

A) $500.01
B) $273.06
C) $463.00
D) $463.29

Question 22

Jami's Home Repair borrows $3,000, at 12.75% interest, for 330 days. Use the exact interest method to find the amount of interest that the bank will collect. (Round to the nearest cent)

A) $300.00
B) $340.00
C) $345.82
D) $5,200.00

Question 23

A loan has a due date of September 4. If it is made on June 9, for how many days is the loan?

A) 85 days
B) 86 days
C) 87 days
D) 90 days

Question 24

Devon takes out a loan of $1,500, at $6 \frac { 1 } { 2 } \%$ simple interest, for 56 months. What is the maturity value of the loan? (Round to the nearest cent)

A) $1,955.00
B) $1,550.75
C) $2,100.25
D) $2,500.50

Question 25

What is the maturity date of a loan taken out on June 18, for 54 days?

A) August 1
B) July 31
C) September 12
D) August 11

Question 26

What is the maturity date of a loan taken out on June 6, for 73 days?

A) August 18
B) July 17
C) August 15
D) June 30

Question 27

A loan has a due date of November 20. If it is made on August 21, for how many days is the loan?

A) 89 days
B) 90 days
C) 91 days
D) 274 days

Question 28

State Bank made a loan at 12% interest for 360 days. If the amount of interest was $934.20, use the ordinary interest method to find the amount of principal borrowed. (Round to the nearest whole dollar)

A) $9,646
B) $8,830
C) $7,785
D) $7,683

Question 29

Legitimate Financial Services made a loan at 9.75% interest for 254 days. If the amount of interest was $270.50, use the exact interest method to find the amount of principal borrowed. (Round to the nearest whole dollar amount)

A) $3,649
B) $3,987
C) $4,138
D) $3,789

Question 30

What is the maturity date of a loan taken out on August 9, for 101 days?

A) October 31
B) November 17
C) November 18
D) November 19

Question 31

Find the maturity value on a loan of $2,500 at 10.5% interest, for 60 months. Use the formula MV = P + I.

A) $1,312.50
B) $3,812.50
C) $4,375.00
D) $1,875.00

Question 32

On May 11, Corlis took out a loan for $2,900, at 8% ordinary interest, for 82 days. What is the maturity date of the loan?

A) August 8
B) August 1
C) August 11
D) August 5

Question 33

Using the ordinary interest method, find the amount of interest on a loan of $5,000 at $11 \frac { 1 } { 2 } \%$ interest, for 284 days.

A) $575.00
B) $394.44
C) $447.40
D) $453.61

Question 34

Julius takes out a loan of $9,500, at 9.5% simple interest, for 4 months. What is the maturity value of the loan? (Round to the nearest cent)

A) $10,191.25
B) $10,265.00
C) $9,883.00
D) $9,800.83

Question 35

Find the amount of interest on a loan of $10,500, at 9% interest, for 124 days using the exact interest method.

A) $945.00
B) $321.04
C) $321.40
D) $325.50

Question 36

Slingerland borrowed $8,000 on July 20, at 11% interest. If the loan was due on October 17, what was the amount of interest on the loan using the exact interest method?

A) $263.01
B) $273.06
C) $214.58
D) $285.20

Question 37

Suppose that you took out a loan at 10% interest for 278 days. If the amount of interest was $761.64, use the exact interest method to find the amount of principal you borrowed. (Round to the nearest whole dollar)

A) $8,590
B) $10,000
C) $9,863
D) $12,000

Question 38

A loan has a due date of December 20. If it is made on September 19, for how many days is the loan?

A) 92 days
B) 90 days
C) 91 days
D) 275 days

Question 39

Tony's Towing borrows $12,250, at 9.5% interest, for 320 days. If the bank uses the exact interest method, how much interest will the bank collect? (Round to the nearest cent)

A) $304.17
B) $1,020.00
C) $1,020.27
D) $1,272.47

Question 40

A loan has a due date of January 15. If it was made on October 3, of the previous year, for how many days is the loan?

A) 102 days
B) 101 days
C) 99 days
D) 104 days

Question 41

If you sign a discount note for $4,200 at a bank discount rate of 9%, for 90 days, what is the effective interest rate? (Round to the nearest tenth percent)

A) 9.2%
B) 9.0%
C) 7.3%
D) 8.5%

Question 42

What are the proceeds of a note for $10,500 at a discount rate of 5%, for 30 months?

A) $7,899.65
B) $11,812.50
C) $9,187.50
D) $8,550.25

Question 43

Velvety Smooth Linens takes out a loan of $3,500, for 314 days. If the amount of interest is $83.29, use the exact interest method to find the rate. (Round to nearest tenth percent)

A) 1.6%
B) 2.9%
C) 2.8%
D) 1.7%

Question 44

Toby signed a simple discount promissory note for $20,000. The discount rate is 8.5%, and the term of the note is 90 days. What are Todd's proceeds on the loan?

A) $19,200
B) $16,000
C) $19,600
D) $19,575

Question 45

Caridad borrowed $15,500 at 11% ordinary interest for 120 days. After 70 days, she made a partial payment of $3,000. What is the final amount due on the loan? (Round to the nearest cent)

A) $13,921.56
B) $14,596.22
C) $13,027.57
D) $12,943.06

Question 46

Use the ordinary interest method to find the rate of interest that Valley Mountain Vineyards pays on a loan of $5,500 for 234 days, if the amount of interest is $345.67. (Round to nearest tenth percent)

A) 8.3%
B) 10.2%
C) 14.5%
D) 9.7%

Question 47

Alicia borrowed $8,500 at 6% ordinary interest for 180 days. After 40 days, she made a partial payment of $2,000. After another 70 days, Alicia made a second partial payment of $2,000. What is the final amount due on the loan? (Round to the nearest cent)

A) $4,755.00
B) $4,687.21
C) $4,500.50
D) $4,684.62

Question 48

Shaylash takes out a loan for $10,500, at 8.5% exact interest. If the amount of interest is $858.03, what is the time period of the loan? (Round any fraction to the next higher day)

A) 364 days
B) 365 days
C) 367 days
D) 351 days

Question 49

Suppose you take out a loan for $5,000, at 6% ordinary interest. If the amount of interest is $91.67, what is the time period? (Round to next higher day)

A) 111 days
B) 125 days
C) 112 days
D) 137 days

Question 50

Suppose you take out a loan for $9,000, at 12% ordinary interest. If the amount of interest is $762.00, what is the time period? (Round any fraction to the next higher day)

A) 246 days
B) 250 days
C) 254 days
D) 258 days

Question 51

What is the time period of a loan for $2,500, at 12% exact interest, if the amount of interest is $118.36? (Round to next higher day)

A) 186 days
B) 135 days
C) 145 days
D) 143 days

Question 52

Myerson borrowed $8,500 at 9% ordinary interest for 200 days. After 120 days, he made a partial payment of $4,000. What is the final amount due on the loan?

A) $4,711.11
B) $4,486.67
C) $4,656.93
D) $4,850.10

Question 53

What is the time period of a loan for $3,000, at 10% ordinary interest, if the amount of interest is $145.00? (Round any fraction to the next higher day)

A) 174 days
B) 176 days
C) 177 days
D) 178 days

Question 54

What is the rate of interest on a loan of $2,000, for 284 days, if the amount of interest is $93.37, using the exact interest method? (Round your answer to the nearest tenth percent)

A) 14.5%
B) 4.7%
C) 5.9%
D) 6.0%

Question 55

Use the ordinary interest method to find the rate of interest that Make Over Picture Photo pays on a loan of $8,000 for 285 days, if the amount of interest is $590.00. (Round your answer to the nearest tenth percent)

A) 9.3%
B) 9.1%
C) 9.0%
D) 8.1%

Question 56

Use the exact interest method to find the rate of interest that Veldez Decks pays on a loan of $9,000 for 354 days, if the amount of interest is $489.50. (Round your answer to the nearest tenth percent)

A) 6.1%
B) 5.6%
C) 4.9%
D) 5.4%

Question 57

Find the amount of the principal on a loan at 6% interest for 274 days if the interest was $68.50, using the ordinary interest method. (Round to the nearest whole dollar amount)

A) $1,500
B) $1,521
C) $313
D) $6,850

Question 58

Ada signed a simple discount promissory note for $5,500. The discount rate is 12%, and the term of the note is 5 months. What are Ada's proceeds on the loan?

A) $4,623
B) $5,225
C) $5,015
D) $4,515

Question 59

Suppose you take out a loan for 180 days in the amount of $13,500 at 11% ordinary interest. After 50 days, you make a partial payment of $1,000. What is the final amount due on the loan? (Round to the nearest cent)

A) $13,210.97
B) $13,698.82
C) $13,242.50
D) $13,232.33

Question 60

Suppose that you took out a loan at 12% interest for 200 days. If the amount of interest was $690.41, use the exact interest method to find the amount of principal you borrowed. (Round to the nearest whole dollar amount)

A) $10,356.00
B) $10,500.00
C) $4,540.00
D) $45.00

Question 61

Webster Digital received a promissory note of $8,000 for 9 months at 7% simple interest from one of its customers. After 4 months, the note was discounted at Bank of Aventura at a discount rate of 10%. What are the proceeds Webster Digital will receive from the discounted note? (Round to the nearest cent)

A) $10,587.99
B) $8,069.17
C) $12,110.00
D) $9,000.00

Question 62

If you sign a discount note for $2,500 at a bank discount rate of 7%, for 3 months, what is the effective interest rate? (Round to the nearest tenth percent)

A) 7.0%
B) 7.1%
C) 7.3%
D) 7.5%

Question 63

What is the effective interest rate of a simple discount note for $3,500 at a bank discount rate of 11%, for 24 months? (Round to the nearest tenth percent)

A) 11.0%
B) 22.0%
C) 28.2%
D) 14.1%

Question 64

Israel signed a simple discount promissory note for $15,000. The discount rate is 7.5%, and the term of the note is 120 days. What are Israel's proceeds on the loan?

A) $15,000
B) $16,000
C) $14,625
D) $19,575

Question 65

Yo Yogurt received a promissory note of $15,500 for 16 months at 8% simple interest from one of its customers. After 9 months, the note was discounted at Gassaway Bank at a discount rate of 10%. What are the proceeds Yo Yogurt will receive from the discounted note? (Round to the nearest cent)

A) $13,846.67
B) $16,152.72
C) $17,153.33
D) $14,595.83

Question 66

What is the effective interest rate of a simple discount note for $2,700 at a bank discount rate of 12.25%, for 36 months? (Round to the nearest tenth percent)

A) 19.0%
B) 22.0%
C) 19.4%
D) 14.1%

Question 67

You sign a simple discount promissory note for $7,000 at a discount rate of 5%, for 30 months. What are the proceeds?

A) $6,125
B) $7,875
C) $875
D) $3,500

Question 68

The owner of a hot dog stand receives a loan of $3,750 at 8.25% for 9 months. Find the amount of simple interest.(Round to the nearest cent)

A) $320.63
B) $232.03
C) $489.65
D) $232.00

Question 69

Bart's Construction, Inc. received a promissory note of $12,500 at 7% simple interest for 14 months from one of its customers. After 4 months, Fairlenders, Inc.discounted the note at a discount rate of 9%. Calculate the proceeds that Bart's will receive from the discounted note. (Round to the nearest cent)

A) $12,462.50
B) $12,506.77
C) $13,520.83
D) $12,303.96

Question 70

Find the interest on the loan:

Question 71

The chief business officer of plumbing supply company arranges a loan of $12,400, at $10 \frac { 1 } { 8 } \%$ interest for 29 months. Find the amount of interest. (Round to the nearest cent)

A) $2,761.21
B) $3,034.13
C) $3,034.00
D) $3,722.47

Question 72

Use the exact method (365 days) and the ordinary interest method (360 days) to compute the amount of interest for the following loan, rounding to the nearest cent:

Question 73

Use the exact method (365 days) and the ordinary interest method (360 days) to compute the amount of interest for the following loan, rounding to the nearest cent:

Question 74

Kate Davidson signed a simple discount note for $9,000. The discount rate is 5%, and the term of the note is 18 months. What is the effective interest rate? (Round to the nearest tenth percent)

A) 5.4%
B) 6.2%
C) 4.9%
D) 3.8%

Question 75

Innovative Engineering received a promissory note of $15,500 at 11% simple interest for 15 months from one of its customers. After 3 months, Union Bank discounted the note at a discount rate of 13%. Calculate the proceeds that Innovative Engineering will receive from the discounted note. (Round to the nearest cent)

A) $18,855.17
B) $16,495.62
C) $15,339.19
D) $12,456.22

Question 76

Find the interest on the loan:

Question 77

What is the effective interest rate of a simple discount note for $7,000 at a bank discount rate of 6%, for 3 months? (Round to the nearest tenth percent)

A) 6.1%
B) 5.8%
C) 6.5%
D) 7.2%

Question 78

Use the exact method (365 days) and the ordinary interest method (360 days) to compute the amount of interest for the following loan, rounding to the nearest cent:

Question 79

What are the proceeds of a note for $5,500 at a discount rate of 8%, for 30 months?

A) $1,100
B) $4,400
C) $6,600
D) $7,700

Question 80

Find the interest on the loan: