Simple Interest Slater Chapter 10 Test Bank Answers - Business Math Procedures 13e Test Bank with Answers by Jeffrey Slater. DOCX document preview.
Practical Business Math Procedures, 13e (Slater)
Chapter 10 Simple Interest
1) The interest is the amount of money borrowed.
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
2) The time of a loan could be expressed in months, years, or days.
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
3) The amount a bank charges for the use of money is called interest.
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
4) The Banker's Rule is the same as the exact interest method.
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
5) Simple Interest = principal × rate.
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
6) 18 months is the same as 1.5 years.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
7) The exact interest method represents time as the exact number of days divided by 365.
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
8) The federal government likes to use ordinary interest.
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
9) July 10 to March 15, given no leap year, is 119 days.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
10) Ordinary interest is never used by banks.
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
11) Ordinary interest results in a slightly higher rate of interest than exact interest.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
12) The U.S. Rule is seldom used in today's workplace.
Difficulty: 1 Easy
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
13) Principal is equal to rate divided by interest times time.
Difficulty: 1 Easy
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
14) Rate is equal to interest divided by the principal times time.
Difficulty: 1 Easy
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
15) To convert time in days, it is necessary to multiply the time in years times 360 or 365.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
16) The U.S. Rule is a method that allows the borrower to receive proper interest credit when a debt is paid off in more than one payment before the maturity date.
Difficulty: 1 Easy
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
17) In the U.S. Rule, the first step is to calculate interest on the total life of the loan.
Difficulty: 2 Medium
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
18) In the U.S. Rule, the partial payment first covers the interest and the remainder reduces the principal.
Difficulty: 2 Medium
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
19) Ordinary interest is required by all banks.
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
20) Interest is the cost of borrowing.
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
21) In calculating interest in the U.S. Rule from the last partial payment, the interest is subtracted from the adjusted balance.
Difficulty: 2 Medium
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
22) Interest is equal to:
A) Principal × rate divided by time
B) Principal divided by rate × time
C) Principal × time
D) Principal × rate × time
E) None of these
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
23) The amount charged for the use of a bank's money is called:
A) Principal
B) Interest
C) Rate
D) Time
E) None of these
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
24) Simple interest usually represents a loan of:
A) One month or less
B) One year or less
C) Two years or less
D) Six months or less
E) None of these
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
25) Federal Reserve banks as well as the federal government like to calculate simple interest based on:
A) Exact interest, ordinary interest
B) Using 30 days in each month
C) Using 31 days in each month
D) Exact interest
E) None of these
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
26) A note dated August 18 and due on March 9, given no leap year, runs for exactly:
A) 230 days
B) 227 days
C) 272 days
D) 203 days
E) None of these
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
27) A $40,000 loan at 4% dated June 10 is due to be paid on October 11. The amount of interest is (assume ordinary interest):
A) $503.00
B) $2,500.00
C) $546.67
D) $105.33
E) None of these
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
28) Interest on $5,255 at 12% for 30 days (use ordinary interest) is:
A) $52.55
B) $55.25
C) $5.26
D) $5.25
E) None of these
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
29) Given interest of $11,900 at 6% for 50 days (ordinary interest), one can calculate the principal as:
A) $1,428,005.70
B) $4,128,005.70
C) $1,428,000.00
D) $1,420.70
E) None of these
Difficulty: 2 Medium
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
30) Interest of $1,632 with principal of $16,000 for 306 days (ordinary interest) results in a rate of:
A) 10%
B) 12%
C) 12 1/2%
D) 13%
E) None of these
Difficulty: 2 Medium
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
31) Which of the following is not true of the U.S. Rule?
A) Calculate interest on principal from date of loan to date of first payment
B) Allows borrower to receive proper interest credits
C) Can use 360 days in its calculations
D) Can involve more than one payment before maturity date
E) None of these
Difficulty: 1 Easy
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
32) The U.S. Rule:
A) Is used only by banks
B) Is never used by banks
C) Allows borrowers to receive interest credit
D) Is hardly used today
E) None of these
Difficulty: 2 Medium
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
33) At maturity, using the U.S. Rule, the interest calculated from the last partial payment is:
A) Subtracted from adjusted balance
B) Added to beginning balance
C) Subtracted from beginning balance
D) Added to adjusted balance
E) None of these
Difficulty: 2 Medium
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
34) The number of days between Aug. 9 and Jan. 3 is:
A) 145
B) 144
C) 147
D) 148
E) None of these
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
35) Jill Ley took out a loan for $60,000 to pay for her child's education. The loan would be repaid at the end of eight years in one payment with interest of 6%. The total amount Jill has to pay back at the end of the loan is:
A) $88,008
B) $80,800
C) $88,800
D) $28,800
E) None of these
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
36) A note dated Dec. 13 and due July 5 (assume no leap year) runs for exactly:
A) 11 days
B) 161 days
C) 204 days
D) 347 days
E) None of these
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
37) Janet Home went to Citizen Bank. She borrowed $7,000 at a rate of 8%. The date of the loan was September 20. Janet hoped to repay the loan on January 20. Assuming the loan is based on ordinary interest, Janet will pay back how much interest on January 20?
A) $188.22
B) $187.18
C) $189.78
D) $187.17
E) None of these
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
38) Joan Roe borrowed $85,000 at a rate of 11 3/4%. The date of the loan was July 8. Joan is to repay the loan on Sept. 14. Assuming the loan is based on exact interest, the interest Joan will pay on Sept. 14 is:
A) $86,860.68
B) $1,860.68
C) $1,886.53
D) $86,886.53
E) None of these
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
39) Joe Flynn visits his local bank to see how long it will take for $1,200 to amount to $2,100 at a simple interest rate of 7%. The time is (round time in years to nearest tenth):
A) 9.2 years
B) 11.1 years
C) 10.7 years
D) 17.1 years
E) None of these
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
40) Matty Kaminsky owns a new Volvo. His June monthly interest is $400. The rate is 8 ½%. Matty's principal balance at the beginning of June is (use 360 days):
A) $65,740.58
B) $64,470.58
C) $65,704.58
D) $56,470.59
E) None of these
Difficulty: 3 Hard
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
41) Joyce took out a loan for $21,900 at 12% on March 18, 2018, which will be due on January 9, 2019. Using ordinary interest, Joyce will pay back on Jan. 9 a total amount of:
A) $2,167.10
B) $24,068.10
C) $24,038.40
D) $2,138.40
E) None of these
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
42) Janet took out a loan of $50,000 from Bank of America at 8% on March 19, 2015, which is due on July 8, 2016. Using exact interest, the amount of Janet's interest cost is:
A) $5,018.44
B) $2,561.44
C) $5,261.44
D) $5,216.44
E) None of these
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
43) Jim Murphy borrowed $30,000 on a 120-day 14% note. Jim paid $5,000 toward the note on day 95. On day 105 he paid an additional $6,000. Using the U.S. Rule, Jim's adjusted balance after the first payment is:
A) $25,000
B) $28,891.67
C) $1,108.33
D) $26,108.33
E) None of these
Difficulty: 3 Hard
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
44) Desiree Brown borrowed $50,000 on a 90-day 8% note. Desiree paid $3,000 toward the note on day 40. On day 60 she paid an additional $4,000. Using the U.S. Rule, Desiree's adjusted balance after the first payment is:
A) $1,008.89
B) $48,008.89
C) $47,444.44
D) $44,744.44
E) None of these
Difficulty: 3 Hard
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
45) Sandra Gloy borrowed $5,000 on a 120-day 5% note. Sandra paid $500 toward the note on day 40. On day 90 she paid an additional $500. Using the U.S. Rule, her adjusted balance after the first payment is:
A) $4,527.87
B) $4,725.87
C) $4,725.70
D) $4,527.78
E) None of these
Difficulty: 3 Hard
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
46) Banks and other financial institutions sometimes calculate simple interest based on:
A) Using 350 days in the year
B) Using 31 days for each month
C) Using 366 days in the year
D) Banker's rule, ordinary interest
E) None of these
Difficulty: 1 Easy
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Remember
Type: Static
Accessibility: Keyboard Navigation
47) With interest of $1,832.00 and a principal of $16,000 for 206 days, using the ordinary interest method, the rate is:
A) 20%
B) 12%
C) 2%
D) 10%
E) None of these
Difficulty: 2 Medium
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
48) The number of days between May 20 and November 22 is:
A) 197
B) 206
C) 186
D) 183
E) None of these
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
49) Sue Gastineau borrowed $17,000 from Regions Bank at a rate of 5.5% to open her lingerie shop. The date of the loan was March 5. Sue hoped to repay the loan on September 19. Assuming the loan is based on ordinary interest, Sue will pay back how much in interest expense?
A) $467.50
B) $541.25
C) $514.25
D) $506.46
E) None of these
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
50) On May 17, Jane took out a loan for $33,000 at 6% to open her law practice office. The loan will mature the following year on January 16. Using the ordinary interest method, what is the maturity value due on January 16?
A) $34,342
B) $34,320
C) $34,323.62
D) $34,254
E) None of these
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
Match the following terms with their definitions.
A) 360 days
B) Principal times rate times time
C) Cost of borrowing
D) 365 days
E) Result of applying the U.S. rule
F) Maturity value
G) Partial payment must be applied to interest first
H) Amount due on due date
I) Amount of money borrowed
J) Consumer groups against it
51) Ordinary interest
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value; LU 10-02 Finding Unknown in Simple Interest Formula; LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.; 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.; 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.; 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
52) Maturity value
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value; LU 10-02 Finding Unknown in Simple Interest Formula; LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.; 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.; 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.; 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
53) U.S. Rule
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value; LU 10-02 Finding Unknown in Simple Interest Formula; LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.; 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.; 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.; 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
54) Banker's rule
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value; LU 10-02 Finding Unknown in Simple Interest Formula; LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.; 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.; 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.; 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
55) Exact interest
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value; LU 10-02 Finding Unknown in Simple Interest Formula; LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.; 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.; 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.; 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
56) Simple interest formula
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value; LU 10-02 Finding Unknown in Simple Interest Formula; LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.; 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.; 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.; 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
57) Principal
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value; LU 10-02 Finding Unknown in Simple Interest Formula; LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.; 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.; 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.; 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
58) Principal and interest
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value; LU 10-02 Finding Unknown in Simple Interest Formula; LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.; 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.; 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.; 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
59) Adjusted balance
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value; LU 10-02 Finding Unknown in Simple Interest Formula; LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.; 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.; 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.; 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
60) Interest
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value; LU 10-02 Finding Unknown in Simple Interest Formula; LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.; 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.; 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.; 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
Answers: 51) A 52) H 53) G 54) J 55) D 56) B 57) I 58) F 59) E 60) C
61) Round to nearest cent:
Principal | Interest Rate | Time | Simple Interest | Total Amount Owed |
$32,000 | 7% | 3 yrs | A | B |
B. $38,720
A. ($32,000 × .07 × 3) = $6,720; B. ($32,000 + $6,720) = $38,720.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
62) Round to nearest cent:
Principal | Interest Rate | Time | Simple Interest | Total Amount Owed |
$18,000 | 9% | 4 mos | A | B |
B. $18,540
A. $18,000 × .09 × 4/12 = $540; B. $540 + $18,000 = $18,540.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
63) Use ordinary interest:
Principal | Interest Rate | Date Borrowed | Date Repaid | Time | Simple Interest | Amount Paid Back |
$9,000 | 11% | Apr 20 | Aug 8 | A | B | C |
B. $302.50
C. $9,302.50
A. 10 + 31 + 30 + 31 + 8 = 110 days; B. $9,000 × .11 × 110/360 = $302.50; C. $9,000 + $302.50 = $9,302.50.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
64) Use exact interest. Round to nearest cent:
Principal | Interest Rate | Date Borrowed | Date Repaid | Time | Simple Interest | Amount Paid Back |
$15,000 | 12% | May 12 | Sept 16 | A | B | C |
B. $626.30
C. $15,626.30
A. 19 + 30 + 31 + 31 + 16 = 127 days; B. I = 15,000 × .12 × 127 / 365 = $626.30; C. $15,000 + $626.30 = $15,626.30.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
65) Find the adjusted balance (principal) using the U.S. Rule (360 day) after the first payment.
Rate | Total Time for Note | Note Amount | Partial Payment on Day 30 | Partial Payment on Day 90 |
11% | 120 days | $7,000 | $900 | $1,200 |
$7000 × .11 × 30/360 = $64.17; $900 - $64.17= $835.83; $7,000 - $835.83 = $6,164.17.
Difficulty: 2 Medium
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
66) Round to nearest cent or hundredth percent as needed:
Principal | Rate | Time | Simple Interest |
? | 11% | 2 mos | $1,250 |
$1,250/(.11 × (2/12)) = $68,181.94. In calculation denominator is not rounded.
Difficulty: 2 Medium
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
67) Interest is $405 on a principal balance of $5,000; assuming a 7 month loan, what is the rate? Round to the nearest cent or hundredth percent as needed.
$405/(5,000 × (7/12)) = 13.89%.
Difficulty: 2 Medium
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
68) 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?
Days = 12 + 30 + 31 + 31 + 30 + 8 = 142 days; $145.89 = $3,000 × .125 × 142/365.
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
69) Ron Tagney owns his own truck. His June interest is $210. The current rate of interest is 11%. Assuming a 360-day year, what was Ron's principal balance at the beginning of June? (Round to nearest cent.)
$210/(.11 × (30/360)) = $22,909.26. Note in calculation denominator is not rounded.
Difficulty: 3 Hard
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
70) Jones of Boston borrowed $40,000, on a 90-day 10% note. After 60 days, Jones made an initial payment of $6,000. On day 80, Jones made an additional payment of $7,000. Assuming the U.S. Rule, what is the adjusted balance after the second payment? Use 360 days.
$40,000 × .10 × 60/360 = $666.67; $6,000 - $666.67 = $5,333.33; $40,000 - $5,333.33 = $34,666.67; 34,666.67 × .10 × (80 - 60) / 360 = $192.59; 7000 - 192.59 = $6,807.41; 34,666.67 - 6,807.41 = $27,859.26.
Difficulty: 3 Hard
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
71) Round all answers to the nearest cent. Woody's Café's real estate tax of $1,110.85 was due on November 1, 2017. Due to financial problems, Woody was unable to pay his café's real estate tax bill until January 15, 2018. The penalty for late payment is 8 1/4% ordinary interest. (A) What is the penalty Woody will have to pay and (B) what will Woody pay on January 15?
Days between Jan 15 and Nov 1 = 29 + 31 + 15 = 75; A. I = $1,110.85 × .0825 × 75/360 = $19.09; B. MV $1,110.85 + $19.09 = $1,129.94.
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
72) Round all answers to the nearest cent. Angel Hall borrowed $82,000 for her granddaughter's college education. She must repay the loan at the end of nine years with 9¼% interest. What is the maturity value Angel must repay?
I = 82,000 × .0925 × 9 = $68,265; MV = 68,265 + 82,000 = $150,265
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
73) Amy Koy met Pat Quinn on Sept. 8 at Queen Bank. After talking with Pat, Amy decided she would like to consider a $9,000 loan at 10 1/2% to be repaid on Feb. 17 of the next year on exact interest. Calculate the amount that Amy would pay at maturity under this assumption. Round all answers to the nearest cent.
Days = 22 (Sept) + 31 (Oct) + 30 (Nov) + 31 (Dec) + 31 (Jan) + 17 (Feb) = 162 days; I = 9,000 × .105 × 162/365 = $419.42; MV = $419.42 + $9,000 = $9,419.42
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
74) Lou Valdez is buying a truck. His monthly interest is $155 at 10 1/4 %. What is Lou's principal balance after the beginning of November? Use 360 days. Round all answers to the nearest cent. DO NOT round the denominator in your calculation.
$155/(.1025 × (30/360)) = $18,146.34.
Difficulty: 3 Hard
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
75) Find A and B in the table below.
Principal | Interest Rate | Time | Simple Interest | Total Amount Owed |
$25,000 | 10% | 2 yrs | A | B |
A. $25,000 × .10 × 2 = $5,000; B. $25,000 + $5,000 = $30,000
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
76) Find A and B in the table below.
Principal | Interest Rate | Time | Simple Interest | Total Amount Owed |
$16,000 | 8% | 3 mos | A | B |
A. 16,000 × .08 × ¼ = $320; B. 320 + 16,000 = $16,320.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
77) Find A and B in the table below.
Principal | Interest Rate | Time | Simple Interest | Total Amount Owed |
$18,000 | 9% | 3 yrs | A | B |
A. $18,000 × .09 × 3 = $4,860; B. $18,000 + $4,860 = $22,860
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
78) Find A and B in the table below.
Principal | Interest Rate | Time | Simple Interest | Total Amount Owed |
$22,000 | 12% | 8 mos | A | B |
A. $22,000 × .12 × 8/12 = $1,760; B. $22,000 + 1,760 = $23,760.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
79) Use ordinary interest:
Principal | Interest Rate | Date Borrowed | Date Repaid | Time | Simple Interest | Amount Paid Back |
$8,000 | 12% | May 5 | Aug 10 | A | B | C |
A. (Using chart from Chapter 7) 222 — 125 = 97 days; B. 8,000 × .12 × 97/360 = $258.67; C. $258.67 + $8,000 = $8,258.67.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
80) Use ordinary interest:
Principal | Interest Rate | Date Borrowed | Date Repaid | Time | Simple Interest | Amount Paid Back |
$12,000 | 9% | Apr 5 | Aug 9 | A | B | C |
A. Using Table from Chapter 7: 221 - 95 = 126 days; B. 12,000 × .09 × 126/360 = $378; C. $378 + $12,000 = $12,378.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
81) Use exact interest:
Principal | Interest Rate | Date Borrowed | Date Repaid | Time | Simple Interest | Amount Paid Back |
$12,000 | 14% | Jun 8 | Oct 7 | A | B | C |
A. 22 + 31 + 31 + 30 + 7 = 121; B. 12,000 × .14 × 121/365 = $556.93; C. $12,000 + $556.93 = $12,556.93
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
82) Use exact interest:
Principal | Interest Rate | Date Borrowed | Date Repaid | Time | Simple Interest | Amount Paid Back |
$24,000 | 12% | May 4 | July 9 | A | B | C |
A. 27 + 30 + 9 = 66 days; B. 24,000 × .12 × 66/365 = $520.77; C. 24,000 + 520.77 = $24,520.77.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
83) 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.
I = 4,000 × .12 × 40/360 = $53.33; 800 - 53.33 = $746.67; 4,000 - 746.67 = $3,253.33.
Difficulty: 3 Hard
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
84) 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.
I = 9,000 × .11 × 65/360 = $178.75; 1,000 - 178.75 = $821.25; 9,000 - 821.25 = $8,178.75
Difficulty: 3 Hard
Topic: LU 10-03 U.S. Rule-Making Partial Note Payments before Due Date
Learning Objective: 10-03 (1) List the steps to complete the U.S. Rule as well as calculate proper interest credits.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
85) Solve:
Principal | Rate | Time | Simple Interest |
? | 12% | 2 mos | $960 |
$960/(.12 × (2/12)) = $48,000.
Difficulty: 2 Medium
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
86) Solve:
Principal | Rate | Time | Simple Interest |
$6,000 | ? | 6 mos | $330 |
$330/($6,000 × (6/12)) = 11%.
Difficulty: 2 Medium
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
87) Solve:
Principal | Rate | Time (in years) | Simple Interest |
$5,000 | 5% | ? | $800 |
800 / (5000 × .05) = 3.2 years
Difficulty: 2 Medium
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
88) Solve:
Principal | Rate | Time (in days using ordinary interest) | Simple Interest |
$60,000 | 12% | ? | $3,600 |
T in years = 3,600 / (60,000 × .12) = .5; .5 × 360 = 180 days
Difficulty: 2 Medium
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
89) 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?
$40,000 × .12 × 8 = $38,400; $38,400 + $40,000 = $78,400
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
90) 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?
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.
Difficulty: 2 Medium
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
91) 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?
A. Interest = 1,900 - 1,000 = 900; Time = 900 / (1,000 × .125) = 7.2 years; B. 7.2 × 12 = 86.4 months
Difficulty: 3 Hard
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
92) 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.)
$205/(.135 × (30/360)) = $18,222.22.
Difficulty: 3 Hard
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
93) 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?
Days = 26 + 31 + 14 = 71 days; 19,500 × 71/360 × .135 = $519.19; 519.19 + $19,500 = $20,019.19.
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
94) 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?
I = 19,500 × 71/365 × .135 = $512.08; 519.19 - 512.08 = $7.11; $512.08 + 19,500 = $20,012.08
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Analyze
Type: Static
Accessibility: Keyboard Navigation
95) 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?
I = $5,000 × .0675 × 241/365 = $222.84
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (2) Calculate simple interest and maturity value by (a) exact interest and (b) ordinary interest.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
96) 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?
P = 294 / (.09 × 30/360) = $39,200
Difficulty: 3 Hard
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
97) 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?
I = 132,000 × .076 × 10 = $100,320; $100,320 + $132,000 = $232,320
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
98) 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?
Interest = $150,000 × .0375 × 5; = $28,125; MV = $150,000 + $28,125 = $178,125.
Difficulty: 3 Hard
Topic: LU 10-01 Calculation of Simple Interest and Maturity Value
Learning Objective: 10-01 (1) Calculate simple interest and maturity value for months and years.
Bloom's: Apply
Type: Static
Accessibility: Keyboard Navigation
99) Calculate the following:
Principal | Rate | Time (in years) | Simple Interest |
$55,000 | 6.25% | ? | $5,156.25 |
T = 5,156.25 / (55,000 × .0625) = 1.5 years.
Difficulty: 2 Medium
Topic: LU 10-02 Finding Unknown in Simple Interest Formula
Learning Objective: 10-02 (1) Using the interest formula, calculate the unknown when the other two (principal, rate, or time) are given.
Bloom's: Understand
Type: Static
Accessibility: Keyboard Navigation
Document Information
Connected Book
Business Math Procedures 13e Test Bank with Answers
By Jeffrey Slater