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Exam 10: Simple Interest

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Question 1

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Use ordinary interest: $\begin{array} { | l | l | l | l | l | l | l | } \hline & & \text { Date } & \text { Date } & & \text { Simple } & \text { Amount } \\\text { Principal } & \text { Interest Rate } & \text { Borrowed } & \text { Repaid } & \text { Time } & \text { Interest } & \text { Paid Back } \\\hline \$ 9,000 & 11 \% & \text { Apr } 20 & \text { Aug } 8 & \text { A } & \text { B } & \text { C } \\\hline\end{array}$

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A. 110 day...

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Question 2

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

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A. 66 days...

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Question 3

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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?

Interest is the cost of borrowing.

A note dated August 18 and due on March 9, given no leap year, runs for exactly:

On May 19, Bette Santoro borrowed $3,000 from Resse Bank at a rate of 12½%. The loan is to be repaid on October 8. Assuming the loan is based on exact interest, what is the total interest cost to Bette?

Federal Reserve banks as well as the federal government like to calculate simple interest based on:

In the U.S. Rule, the first step is to calculate interest on the total life of the loan.

Find A and B in the table below. $\begin{array} { | l | l | l | l | l | } \hline & & & \text { Simple } & \text { Total Amount } \\\text { Principal } & \text { Interest Rate } & \text { Time } & \text { Interest } & \text { Owed } \\\hline \$ 18,000 & 9 \% & 3 \text { yrs } & \text { A } & \text { B } \\\hline\end{array}$

Simple interest usually represents a loan of:

Find A and B in the table below. $\begin{array} { | l | l | l | l | l | } \hline \text { Principal } & \text { Interest Rate } & \text { Time } & \begin{array} { l } \text { Simple } \\\text { Interest }\end{array} & \begin{array} { l } \text { Total Amount } \\\text { Owed }\end{array} \\\hline \$ 22,000 & 12 \% & 8 \mathrm { mos } & \mathrm { A } & \mathrm { B } \\\hline\end{array}$

The interest is the amount of money borrowed.

Interest is equal to:

Principal is equal to rate divided by interest times time.

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

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?

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

Ordinary interest is never used by banks.

Round to nearest cent: $\begin{array} { | l | l | l | l | l | } \hline \text { Principal } & \text { Interest Rate } & \text { Time } & \begin{array} { l } \text { Simple } \\\text { Interest }\end{array} & \begin{array} { l } \text { Total Amount } \\\text { Owed }\end{array} \\\hline \$ 18,000 & 9 \% & 4 \mathrm { mos } & \mathrm { A } & \mathrm { B } \\\hline\end{array}$

Match the following terms with their definitions. -Interest