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Exam 7: Applications of Simple Interest

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Question 31

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The purchaser of a 168-day T-bill with a face value of $100,000 paid $98,929.92 for it. She then sold the T-bill to a client at a rate of interest of 2% simple interest. What profit did she realize on the sale?

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Question 32

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An investment promises two payments of $1,500, 120 and 150 days from today at a rate of 7%. What price will an investor pay today if her required rate of return is 6.5% simple interest?

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Question 33

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On September 15, Miguel has student loans totalling $25,000. Miguel agreed to a $350 per month repayment schedule at which time the annual simple interest rate was 7.45%. Determine the balance of the loan at the end of November.

On March 17, Luke borrowed $4,500 from his revolving line of credit. The current annual interest rate at the time was 5.30%. On April 30, Luke repaid $1,500, and concurrently the annual interest rate decreased to 5.10%. On June 30, Luke repaid the total amount borrowed, along with interest. Determine the simple interest amount to be repaid.

Commercial Paper with a face value of $1,000,000 issued at a discount rate of 7.5% simple interest has a term of 360 days. At what price was it issued?

A 6-month note dated June 30 for $2,900 bears interest at 8.5% simple interest. Determine the proceeds of the promissory note if it is discounted at 4.75% on September 1.

On January 20, Derek signed a contract to pay Violet $1,800 plus interest on August 15 and $2,200 plus interest on September 12. Both payments carried a 6% simple interest annually. Violet then sold both contracts to Stephanie on May 10 at a rate of 3.5% annually. Determine how much she received Round to the nearest $100.

Calculate missing value for the promissory note:

A contract requires payments of $750 in 100, and 200 days. What is the value of the contract today if the payments are discounted to yield 7.5% simple interest?

An $8,000 demand loan at a fixed simple interest rate of 10.5% was advanced on May 10. A payment of $2,000 was made on July 15 and a final payment was made on Sept. 5. What was the size of the final payment?

Calculate missing value for the promissory note:

Calculate missing value for the promissory note:

For investments over $5,000, a bank quotes interest rates of 2.75% on 90-day GIC's, and 3.25% on 180-day GIC's. How much more simple interest will an investor earn by placing $8,000 in the 180-day GIC, rather than purchasing two consecutive 90-day GIC's?

Ada had $12,500 in student loans. On Sept 3, she began repayments of $450 per month when simple interest rates were 9.2% annually. On October 8 the interest rates rose to 9.5%. By what amount will the principal be reduced given the $450 payment on October 31?

Claude Scales, a commercial fisherman, bought a new navigation system for $10,000 from Coast Marine Electronics on March 20. He paid $2,000 in cash and signed a conditional sales contract requiring a payment on July 1 of $3,000 plus interest on the $3,000 at a rate of 8%, and another payment on September 1 of $5,000 plus interest at 8% from the date of the sale. The vendor immediately sold the contract to a finance company, which discounted the payments at its required return of 12% simple interest. What proceeds did Coast Marine receive from the sale of the contract?

A 90-day promissory note dated June 30 for $2,000 at an interest rate of 5.5% simple interest was sold on July 15, discounted at 8%. What were the proceeds of the note on July 15?

Calculate missing value for the promissory note:

Calculate missing value for the promissory note:

Determine the issue price of a 91-day, $100,000 Government of Alberta Treasury Bill that was issued at a discount rate of 5.75% simple interest.

Calculate the price of a $50,000, 91-day Province of Nova Scotia Treasury bill on its issue date if the current market rate of return is 4.273% simple interest.