Question 1

Given: a 12% 90-day $4,000 note. Find the adjusted balance (principal)using the U.S. Rule (360 days)after the first $800 payment on the 40th day.

Accepted Answer

I = 4,000 × .12 × 40/360 = $53.33; 800 - 53.33 = $746.67; 4,000 - 746.67 = $3,253.33.

Question 2

Rochelle Destin bought a new Buick Enclave. Her monthly January interest was $294.00. The current rate of interest is 9%. Assuming a 360-day year, what was Rochelle's balance at the beginning of January?

Accepted Answer

P = 294 / (.09 × 30/360)= $39,200

Question 3

Use exact interest:
 $\begin{array}{|l|l|l|l|l|l|l|}
\hline & \text { Interest } & \text { Date } & \text { Date } & & \text { Simple } & \text { Amount } \
 \text { Principal }&\text { Rate } & \text { Borrowed } & \text { Repaid } & \text { Time } & \text { Interest } & \text { Paid Back } \
\hline \$ 12,000 & 14 \% & \text { Jun } 8 & \text { Oct } 7 & \text { A } & \text { B } & \text { C } \
\hline
\end{array}$

Accepted Answer

The answer of Use exact interest:
 \(\begin{array}{|l|l|l|l|l|l|l|}
\hline & \text {...

Question 4

Louis Carroll visits his local bank to see how long it will take for $1,000 to amount to $1,900 at a simple interest rate of 12 1/2%. A. How long will it take in years? B. How long will it take in months?

Accepted Answer

A. Interest = 1,900 - 1,000 = 900; Time = 900 / (1,000 × .125)= 7.2 years; B. 7.2 × 12 = 86.4 months

Question 5

Solve:
 $$\begin{array} { | l | l | l | l | } 
\hline \text { Principal } & \text { Rate } & \text { Time } & \begin{array} { l } 
\text { Simple } \
\text { Interest }
\end{array} \
\hline \$ 6,000 & ? & 6 \mathrm { mos } & \$ 330 \
\hline
\end{array}$$

Accepted Answer

The answer of Solve:
 \[\begin{array} { | l | l...

Question 6

Joe and Kathy Graczak borrowed $132,000 for their son's four-year college education. They must repay the loan at the end of 10 years. With 7.6% on parent PLUS loan, what is the maturity value Joe and Kathy must repay?

Accepted Answer

I = 132,000 × .076 × 10 = $100,320; $100,320 + $132,000 = $232,320

Question 7

Solve:
 $$\begin{array} { | l | l | l | l | } 
\hline \text { Principal } & \text { Rate } & \begin{array} { l } 
\text { Time (in days using } \
\text { ordinary interest) }
\end{array} & \text { Simple Interest } \
\hline \$ 60,000 & 12 \% & ? & \$ 3,600 \
\hline
\end{array}$$

Accepted Answer

The answer of Solve:
 \[\begin{array} { | l | l...

Question 8

Ben Young borrowed $5,000 on April 19 from Reliance Bank at a rate of 6.75%. Ben must repay the loan on December 16 of the same year. Assuming the loan is based on exact interest, what is the total interest cost?

Accepted Answer

I = $5,000 × .0675 × 241/365 = $222.84

Question 9

Abby borrowed $3,000 at 12 3/4% on Sept. 10. The loan is due on Jan. 29. Assuming the loan is based on ordinary interest, how much will Abby pay on Jan. 29?

Accepted Answer

Days = 20 (Sep)+ 31 (Oct)+ 30 (Nov)+ 31 (Dec)+ 29 (Jan)= 141; 3,000 × .1275 × 141/360 = $149.81; $149.81 + $3,000 = $3,149.81.

Question 10

Solve:
 $$\begin{array} { | l | l | l | l | } 
\hline \text { Principal } & \text { Rate } & \begin{array} { l } 
\text { Time (in } \
\text { years) }
\end{array} & \begin{array} { l } 
\text { Simple } \
\text { Interest }
\end{array} \
\hline \$ 5,000 & 5 \% & ? & \$ 800 \
\hline
\end{array}$$

Accepted Answer

The answer of Solve:
 \[\begin{array} { | l | l...

Question 11

Alice took out a loan for $19,500 at 13 1/2% on Nov 4, 2018 which will be due on January 14, 2019. Using ordinary interest, what will be the interest cost and what amount will Alice pay back on January 14, 2019?

Accepted Answer

Days = 26 + 31 + 14 = 71 days; 19,500 × 71/360 × .135 = $519.19; 519.19 + $19,500 = $20,019.19.

Question 12

Given: an 11% 120-day $9,000 note. Find the adjusted balance (principal)using the U.S. Rule (360 days)after the first payment on the 65th day of $1,000.

Accepted Answer

I = 9,000 × .11 × 65/360 = $178.75; 1,000 - 178.75 = $821.25; 9,000 - 821.25 = $8,178.75

Question 13

Calculate the following:
 $$\begin{array} { | l | l | l | l | } 
\hline \text { Principal } & \text { Rate } & \begin{array} { l } 
\text { Time (in } \
\text { years) }
\end{array} & \begin{array} { l } 
\text { Simple } \
\text { Interest }
\end{array} \
\hline \$ 55,000 & 6.25 \% & \text { ? } & \$ 5,156.25 \
\hline
\end{array}$$

Accepted Answer

The answer of Calculate the following:
 \[\begin{array} { | l...

Question 14

Molly Joy owns her own car. Her June monthly interest was $205. The rate is 13 1/2%. Find out what Joy's principal balance is at the beginning of June. Use 360 days. (Do not round denominator in calculation.)

Accepted Answer

$205/(.135 × (30/360))= $18,222.22.

Question 15

Jane Smith took out a loan for $40,000 to pay for her child's education. The loan would be repaid at the end of eight years in one payment with interest of 12%. What is the total amount Jane has to pay back at the end of the loan?

Accepted Answer

$40,000 × .12 × 8 = $38,400; $38,400 + $40,000 = $78,400

Question 16

Bruce Seem took out the same loan as Alice in the preceding problem, but his terms were exact interest. What is the difference in interest cost and what will Bruce pay back on January 14, 2019? Who had better terms and why?

Accepted Answer

I = 19,500 × 71/365 × .135 = $512.08; 519.19 - 512.08 = $7.11; $512.08 + 19,500 = $20,012.08

Question 17

Use exact interest:
 $\begin{array}{|l|l|l|l|l|l|l|}
\hline & \text { Interest } & \text { Date } & \text { Date } & & \text { Simple } & \text { Amount } \
 \text { Principal }&\text { Rate } & \text { Borrowed } & \text { Repaid } & \text { Time } & \text { Interest } & \text { Paid Back } \
\hline \$ 24,000 & 12 \% & \text { May } 9 & \text { July } 9 & \text { A } & \text { B } & \text { C } \
\hline
\end{array}$

Accepted Answer

The answer of Use exact interest:
 \(\begin{array}{|l|l|l|l|l|l|l|}
\hline & \text {...

Question 18

Tom borrowed $150,000 for his son Jeff's law school tuition at the University of Mississippi. Tom received a rate of 3.75% for 5 years. Using 360 days in a year, what is the maturity value of the loan?

Accepted Answer

Interest = $150,000 × .0375 × 5; = $28,125; MV = $150,000 + $28,125 = $178,125.

Question 19

Solve:
 $$\begin{array} { | l | l | l | l | } 
\hline & & & \text { Simple } \
 \text { Principal } & \text { Rate } & \text { Time } & \text { Interest } \
\hline ? & 12 \% & 2 \mathrm { mos } & \$ 960 \
\hline
\end{array}$$

Accepted Answer

The answer of Solve:
 \[\begin{array} { | l | l...

Quiz 10: Simple Interest

Given: a 12% 90-day $4,000 note. Find the adjusted balance (principal)using the U.S. Rule (360 days)after the first $800 payment on the 40th day.

Rochelle Destin bought a new Buick Enclave. Her monthly January interest was $294.00. The current rate of interest is 9%. Assuming a 360-day year, what was Rochelle's balance at the beginning of January?

Louis Carroll visits his local bank to see how long it will take for $1,000 to amount to $1,900 at a simple interest rate of 12 1/2%. A. How long will it take in years? B. How long will it take in months?

Solve: $\begin{array} { | l | l | l | l | } \hline \text { Principal } & \text { Rate } & \text { Time } & \begin{array} { l } \text { Simple } \\\text { Interest }\end{array} \\\hline \$ 6,000 & ? & 6 \mathrm { mos } & \$ 330 \\\hline\end{array}$

Joe and Kathy Graczak borrowed $132,000 for their son's four-year college education. They must repay the loan at the end of 10 years. With 7.6% on parent PLUS loan, what is the maturity value Joe and Kathy must repay?

Solve: $\begin{array} { | l | l | l | l | } \hline \text { Principal } & \text { Rate } & \begin{array} { l } \text { Time (in days using } \\\text { ordinary interest) }\end{array} & \text { Simple Interest } \\\hline \$ 60,000 & 12 \% & ? & \$ 3,600 \\\hline\end{array}$

Ben Young borrowed $5,000 on April 19 from Reliance Bank at a rate of 6.75%. Ben must repay the loan on December 16 of the same year. Assuming the loan is based on exact interest, what is the total interest cost?

Abby borrowed $3,000 at 12 3/4% on Sept. 10. The loan is due on Jan. 29. Assuming the loan is based on ordinary interest, how much will Abby pay on Jan. 29?

Solve: $\begin{array} { | l | l | l | l | } \hline \text { Principal } & \text { Rate } & \begin{array} { l } \text { Time (in } \\\text { years) }\end{array} & \begin{array} { l } \text { Simple } \\\text { Interest }\end{array} \\\hline \$ 5,000 & 5 \% & ? & \$ 800 \\\hline\end{array}$

Alice took out a loan for $19,500 at 13 1/2% on Nov 4, 2018 which will be due on January 14, 2019. Using ordinary interest, what will be the interest cost and what amount will Alice pay back on January 14, 2019?

Given: an 11% 120-day $9,000 note. Find the adjusted balance (principal)using the U.S. Rule (360 days)after the first payment on the 65th day of $1,000.

Molly Joy owns her own car. Her June monthly interest was $205. The rate is 13 1/2%. Find out what Joy's principal balance is at the beginning of June. Use 360 days. (Do not round denominator in calculation.)

Jane Smith took out a loan for $40,000 to pay for her child's education. The loan would be repaid at the end of eight years in one payment with interest of 12%. What is the total amount Jane has to pay back at the end of the loan?

Bruce Seem took out the same loan as Alice in the preceding problem, but his terms were exact interest. What is the difference in interest cost and what will Bruce pay back on January 14, 2019? Who had better terms and why?

Tom borrowed $150,000 for his son Jeff's law school tuition at the University of Mississippi. Tom received a rate of 3.75% for 5 years. Using 360 days in a year, what is the maturity value of the loan?

Solve: $\begin{array} { | l | l | l | l | } \hline & & & \text { Simple } \\ \text { Principal } & \text { Rate } & \text { Time } & \text { Interest } \\\hline ? & 12 \% & 2 \mathrm { mos } & \$ 960 \\\hline\end{array}$