8WK BUS 20 Check-in Assignment #5- Worksheet
Chapter 10 Simple Interest
1. nd the amount of interest on the following loan, using the exact interest method?
Princip
al
Rate
(%)
$15,00
13%
0
Time
(days)
Exact
Interest
120
= $641.1
Answer:$641.1
2. nd the amount of interest on the following loan, using the ordinary interest
method?
Princip
al
Rate
(%)
$20,60
0
12
Time
(days)
98
Ordinary
Interest
= $663.71
Answer:$663.71
3.Mike Johnson took out a loan for $5,880 at the Mountain Ridge Bank for 110 days.
The bank prefers the ordinary method for calculating interest. What rate of interest
was charged if the amount of interest was $152? Round to the nearest tenth of a
percent.
152/5880(110/365) = n
n = 8.57%
fi
fi
Answer: 8.57%
4.Maxi Tile Company borrowed $40,000 on April 6 for 66 days. The rate was 14%
using the ordinary interest method. On day 25 of the loan, Maxi made an initial partial
payment of $15,000, and on day 45 of the loan, then Maxi made a 2nd partial
payment of $10,000.
A. What was the new maturity value of the loan?
40,000 * 0.14 * 25/365 = 383.561643836
15,000 - 383.561643836 = 14,611.11
40,000 - 14,611.11 = 25,388.89
25,388.89 * .14* 20/365 = 194.7640876712
10,000 - 194.7640876712 = 9805.23591233
25,388.89 - 9805.23591233 = 15,583.65408767
15,583.65408767 * 0.14 * 21/365 = 125.52
15,583.65 - 125.52 = 15,458.13
Answer:$15,458.13
B. What was the maturity date of the loan?
Answer: June 11
5.Boz Foster signed a $10,000 simple discount promissory note at a bank discount
rate of 6%. If the term of the note was 125 days, what was the effective interest rate
of the note? Round your answer to the nearest hundredth of a percent.
Answer:5.68%
6.Complete the following Chart
Face
Value
Discount Rate Term
(%)
(weeks)
$75,000 5.15%
4
Interest
Purchase
Price
Effective
Rate (%)
296.30
75,296.3
4.01%
$28,000 4.90%
26
249704
277,704
4.78%
Chapter 11 QUESTIONS
1.Using Table 11-1 (below), calculate the compound amount and compound interest
for the following investments.
Principal
$7,700
$3,000
Time
Period
(years)
Nominal
Rate (%)
5
6%
Quarterly
2,670.78
1
6%
Monthly
185.03343
Interest
Compounded
Compound
Amount
Compound
Interest
10370.783
3185.03343
2.Calculate the present value (principal) and the compound interest for the following
investments. Use Table 11-2 (Below). Round answers to the nearest cent.
Compound
Amount
Term of
Investment
Nominal
Rate (%)
Interest
Compounded
Present
Value
$150,000
22 years
15%
annually
6,930.09
$5,500
15 months
8%
Quarterly
1,676.30
Compound
Interest
3246711.8
572.44
3.New City Delivery Service bought vans costing $24,800 each. How much will the
company have to invest today to accumulate enough money to buy six new vans at
the end of 4 years? New City's bank is currently paying 12% interest compounded
quarterly. (use table 11-2)
6*24800
Answer: 92,727.24
4.Airtight Industries is making plans to expand its production facility in a few years.
New plant construction costs are estimated to be $4.50 per square foot. The company
invests $850,000 today at 8% interest compounded quarterly.
A. How many square feet of new facility could be built after 3 1/2 Years? (Three and a
half years) Round to the nearest whole square foot.
1,121,556.95 / 4.5
Answer: 249,234.88
B. If the company waits 5 years and construction costs increase to $5.25 per square
foot, how many square feet could be built? Round to the nearest whole square foot.
What do you recommend?
1,263,055.29 / 5.25
Answer: 240,581.96