Question 1

Ninety days ago Stella signed an agreement with Manon requiring her to make three payments of $400 plus interest 90, 150, and 210 days, respectively, from the date of the agreement. Each payment was to include interest on the $400 principal at the rate of 13.5% from the date of the agreement. Stella now wants Ed to renegotiate the agreement and accept a single payment 30 days from now, instead of the three scheduled payments. What payment should Manon require in the new agreement if money is worth 8.5%?

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Question 2

Seth has a loan to repay. His terms are payments of $1,000 in six months and $1,000 in one year. He wants to settle the debt in three months. If the rate of interest is 6.5%, what single equivalent payment should Sam make?

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The answer of Seth has a loan to repay. His...

Question 3

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.

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Question 4

What single payment, 45 days from now, is economically equivalent to the combination of three payments of $1750 each: one due 75 days ago, the second due today, and the third due in 75 days from now? Money is worth 9.9% per annum.

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The answer of What single payment, 45 days from now,...

Question 5

A loan of $10,000 is to be repaid by three payments of $2,500 due in two, four, and six months, and a fourth payment due in eight months. What should be the size of the fourth payment if an interest rate of 11% is charged on the loan? Use today as the focal date.

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Question 6

Which of the following two payment streams has the greater economic value today if money can earn 3.5%: $500 now, $600 in three months, plus $900 in six months or $700 now, $300 in three months, plus $1,000 in nine months?

Accepted Answer

The answer of Which of the following two payment streams...

Question 7

Maurice borrowed $6,000 from Heidi on April 23 and agreed to make payments of $2,000 on June 1 and $2,000 on August 1, and to pay the balance on October 1. If simple interest at the rate of 10% was charged on the loan, what is the amount of the third payment?

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Question 8

Sam has won a lottery. He can take $5,000 now or $5,500 in one year. If money can earn 8%, which option should he choose?

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Question 9

What payment on August 19 is equivalent to a $1,000 payment on the preceding January 19, if the rate of interest is 4.5%?

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Question 10

A large retail store offers no payments, no interest for six months on all furniture and appliance purchases exceeding $1,500. If money can earn 3.5%, how much should the store accept as a payment today on furniture costing $1,850?

Accepted Answer

The answer of A large retail store offers no payments,...

Question 11

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.

Accepted Answer

The answer of The original $3,000 loan was advanced on...

Question 12

A karate club offers two payment plans for a one-year membership. The first is a cash price of $475. The second is a payment of $250 today, and $250 in six months. If the interest rate charged by the club is 8%, which option has the greater economic value?

Accepted Answer

The answer of A karate club offers two payment plans...

Question 13

A $10,000 loan made on January 1 at 7%, is to be repaid by payments of $3,500 on July 1, $3,500 on October 1, and a final payment on January 1 of the next year. What is the amount of the final payment required to pay off the loan in full?

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Question 14

How can you determine which of three payments has the largest economic value?

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Question 15

Calculate the equivalent value of the scheduled payments if money can earn the rate of return specified in the last column. Assume that any payments due before today have been missed.

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Question 16

How can you determine whether two payments are equivalent to each other?

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Question 17

A $6,000 loan at 8% is to be repaid in three equal payments at three months, six months, and nine months. Determine the size of the equal payments.

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Question 18

A $7,500 loan will be paid off by four equal payments to be made 2, 5, 9, and 12 months after the date of the loan. What is the amount of each payment if the interest rate on the loan is 9.9%?

Accepted Answer

The answer of A $7,500 loan will be paid off...

Question 19

A loan of $4,000 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.

Accepted Answer

The answer of A loan of $4,000 at 13% is...

Question 20

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?

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The answer of A large retail store offers a payment...

Quiz 6: Simple Interest

Seth has a loan to repay. His terms are payments of $1,000 in six months and $1,000 in one year. He wants to settle the debt in three months. If the rate of interest is 6.5%, what single equivalent payment should Sam make?

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.

What single payment, 45 days from now, is economically equivalent to the combination of three payments of $1750 each: one due 75 days ago, the second due today, and the third due in 75 days from now? Money is worth 9.9% per annum.

A loan of $10,000 is to be repaid by three payments of $2,500 due in two, four, and six months, and a fourth payment due in eight months. What should be the size of the fourth payment if an interest rate of 11% is charged on the loan? Use today as the focal date.

Which of the following two payment streams has the greater economic value today if money can earn 3.5%: $500 now, $600 in three months, plus $900 in six months or $700 now, $300 in three months, plus $1,000 in nine months?

Maurice borrowed $6,000 from Heidi on April 23 and agreed to make payments of $2,000 on June 1 and $2,000 on August 1, and to pay the balance on October 1. If simple interest at the rate of 10% was charged on the loan, what is the amount of the third payment?

Sam has won a lottery. He can take $5,000 now or $5,500 in one year. If money can earn 8%, which option should he choose?

What payment on August 19 is equivalent to a $1,000 payment on the preceding January 19, if the rate of interest is 4.5%?

A large retail store offers no payments, no interest for six months on all furniture and appliance purchases exceeding $1,500. If money can earn 3.5%, how much should the store accept as a payment today on furniture costing $1,850?

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.

A karate club offers two payment plans for a one-year membership. The first is a cash price of $475. The second is a payment of $250 today, and $250 in six months. If the interest rate charged by the club is 8%, which option has the greater economic value?

A $10,000 loan made on January 1 at 7%, is to be repaid by payments of $3,500 on July 1, $3,500 on October 1, and a final payment on January 1 of the next year. What is the amount of the final payment required to pay off the loan in full?

How can you determine which of three payments has the largest economic value?

Calculate the equivalent value of the scheduled payments if money can earn the rate of return specified in the last column. Assume that any payments due before today have been missed.

How can you determine whether two payments are equivalent to each other?

A $6,000 loan at 8% is to be repaid in three equal payments at three months, six months, and nine months. Determine the size of the equal payments.

A $7,500 loan will be paid off by four equal payments to be made 2, 5, 9, and 12 months after the date of the loan. What is the amount of each payment if the interest rate on the loan is 9.9%?

A loan of $4,000 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.

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?