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Simple Interest (Exercises 2.1 To 2.7)
Simple Interest (Exercises 2.1 To 2.7)
3. If a person deposits noy $50,000 in a time deposit with a 2.20% monthly interest
rate, and
does not withdraw the deposit and reinvest the interest. How much
M = C* will you have in
1 + (¿)(t)
Formula: M=C[1+ (0(0]) M = (50,000)[1+(0.02)(1)
M = (50,000)(1 + 0.02)
C= 50,000 M = (50,000)(1.02)
t= 1 month M = 50,800
i= 2%
5. Maria Eugenia wishes to purchase a property within 2 years. Assume that the down payment that
will have to pay on those dates will be $60,000. If you wish to have that amount within 2 years.
How much should you invest in your fixed income deposit that yields 0.8% simple monthly interest?
_M
Formula:
151+ (0()
0.8% monthly = years
M= 60,000 (0.8%)(12) = years
t= 2 years 9.6% p.a.
i= 0.8% per month => 9.6% per annum
_M
Formula: 151+ (0)( t) *From July 11 to
September 15
M= 5,000 there are 66 days
t= Jul 11 - Sep 15 => Approx.66 days according to the
i= 5% per annum => 0.01369863% per day
5,000 5,000
C51+(0.000136986)(66) 1 + 0.009041095 4,955.199565
5,000
1.009041095
9. One month after taking out a loan, Jose Luis must pay exactly
$850. How much did you get in loan, if the payment to be made includes interest of 18%
per year?
_ M
Formula:
151+ (0( t)
M= 850 18% p.a. = months
t= 1 month 18%
------= months
i= 18% per annum => 1.5% per month 12
1.5% per month
i=t
16% p.a. = months
16%
Formula: I=C*i*t = months
C= 22,000 12
t= 6 months 1.3333% per month
I = (22,000)(0.013333)(6)
i= 16% per annum => 1.3333% per month I = (22,000)
(0.0779998)
I = 1,759.956
I=C*i*t , 125,000 125,000 125,000
I =(80,000)(0.015)(6) C
= 1 + (0.01)(6) 1 + 0.06 1.06 117,924.5283
15. Salome has 2 debts: a) She owes $80,000 to a bank that charges 1.5% per month.
b) He buys a car on credit; he pays a certain down payment and has a balance of $125,000 that he will
begin to pay in 8 months; in the meantime, he must pay 12% simple annual interest during that
period. How much interest will you pay over the next six months?
Formula: I=c*i*t M
Formula: c-
C= 80,000 1 + (D)(6)
t= 6 months M= 125,000
i= 1.5% per month t= 6 months
i= 12% per annum => 1% per
month
I = (80,00)(0.09) 125,000.00
I = 7,200 - 117,924.5283
7,075.4717
Sum of interest
7,200
+ 7,075.4717
14,275.4717
16. The movements of a customer's credit account were:
Balance recorded on February 14 $ 450
Charge on February 27 $ 150
Credit memo on March 31 $ 400
Charge on April 15 $1000
Charge on April 30 $ 100
If the store charges 14% annual interest,
how much will the customer have to pay on May 15 to settle the account? R= 1, 325.390243
pesos
M = C * (1 + i * T)
M = C * (1 + i * T)
25,000 25,000
c
= 1+(0.0083333)(2) 1 + 0.016666
25,000 24,590.18006
1.016666
b)
Formula:
_ M ---------51+4 t)
M= 25,000
t= 30 days => 1 month / 60 days => 2 months
i= 10% p.a. => 0.8333% p.a. => 0.8333%
monthly
45,000.00
+24,793.38925
24,590.18006
94,383.56931
Formula: _ M
151+ (0( t)
M= 64,000
t= 30 days => 1 month
i= 10% p.a. => 0.8333% p.a. => 0.8333%
monthly
64,000
151+ (0.0083333)(1) ’
64,000 64,000
= = 63, 471.07648
1 + 0.0083333 = 1.0083333 = .
30,000.00
+
63,471.07648
93,471.07648
a) 90,000 b) 94,383.56931 c) 93,471.07648
20. At prevailing rates, what amount would be received at the end of the transaction for a
promissory note
with yield payable at maturity for $50,000 for a term of 3 months?
R= The Ordinary
24. According to the actual criteria, how much time elapses from May 14
to November 15?
1.666666667
1
1.666666667
í = 0.599999999 * 100
i = 59.9999999999%
per annum
28. A person lent $400 to a friend, and 4 months later charged him $410. What
annual interest rate did the friend pay?
Formula:
M_1 {=C,1 t
C= 400
t= 4 months
M= $410
410
400
annual = 4
0.333333333 months
. 1.025-1 per year 4 = 0.33333333333 years
i = ----------
0.333333333
. 0.025
i = ----------
0.333333333
í = 0.075 * 100
i = 7.5% p.a.
30. A bicycle costs $800. A buyer pays $500 cash and the remainder in 60 days, with a 5%
surcharge on the cash price at
. What simple annual interest rate was applied?
i equivalent = ?
quarters= 4 in a year
i= 5 % p.a.
proportional i = 5% * 4 = 20% per annum
34. A lady repays $205.08 for a promissory note of $185 signed on May 10
with 38% simple annual interest. When did you pay for it? R= November 14
Month Dias
205.08
-1 185 May 22
t= 0.38 June 30
1.108540541-1
July 31
t= 0.108540541
0.14
August 31
t = 0.38365 September 30
t = 0.1085 / 0.0010 October 31
t = 189 Days November 14
Total 189
Formula t C*i
c= 1,500
i= 22% per annum => 1.8333333333333% per
I= month
400
400
t = --=-------------- -
(1,500)(0.22)
400
t=- On May 7 of the following year,
330 will add $400 of interest.
t = 1.21212121
1.212121 (365) = 442.424165 days
442.424165
= 14.74747217 months
30
0.74747217 * 30 = 22 days
1 year 2 months 22 days
2. What amount of simple monthly interest yields a principal of
$40,000 at 13% simple annual interest?
Formula: I=C*i*
t
C= 40,000
t= 1 month
i= 13% per year => 1.0833% per month
i=t
13% p.a. = months
13%
------ = months
12
1.0833% per month
I = (40,000)(0.010833)(1)
I = (40,000)(0.010833)
I = 433.32
Formula: M=C[1+(i)(t)]
C= 220,000
t= 2 months
i= 0.20%
M=C*1 (i)(t)
M = (220,000)[1+(0.002)(2)
M = (220,000)(1 + 0.004)
M = (220,000)(1.004)
M = 220,880
6. How much should you invest today at 1.8% simple interest per month to have
$20,000 in two months?
Formula:
M 151+ (0( t)
M= 20,000
t= 2 months
i= 1.8% per month
Formula: c
_M
= 1 + (i)(t)
M= 3,500
t= March 13 - July 11 => Approx. 120 days
i= 6% p.a. => 0.016438356 per day
10. What is the present value of a $9,000 bill of exchange that matures in
60 days, if the interest rate is 17% per annum?
Formula: I=C*i*
C=
t
7,500
t= 1 semester
i= 8% semiannual
I = c * i *t
I = (7,500)(0.08)(1)
I = (7,500)(0.08)
I = 600
17. What is the balance at 1o. of June of a credit account which is charged monthly
18% simple interest per annum and has had the following movements? R=
745.3693118 pesos
March 1 balance $850
March 15 season ticket $150
March 31 charge $450
May 15 season ticket $200
May 31 season ticket $250
M = C * (1 + i * T)
M = C * (1 + i * T)
M = C * (1 + i * T)
M = C * (1 + i * T)
i=t
Formula: M=C[1+ (0(0)] 10% per year =
daily
10% =
months
C= 1'000,000 365
1.25% per month
t= 28 days, 91 days and 180 days
i= 10% per annum => 0.02739726% per day
a) M = C * 1 + (¿)(t)
M = (1'000,000)[1+(0.002739726)(28)
M = (1'000,000)(1 + 0.007671233)
M = (1,000,000)(1.00767123)
M = 1'007671.23
M = C * 1 + (¿)(t)
M = (1'000,000)[1+(0.002739726)(91)
b) M = (1'000,000)(1 + 0.02493151)
M = (1'000,000)(1.02493151)
M = 1'024,931.51
c)
M=C*1+ (í)(t)
M = (1'000,000)[1+(0.002739726)(180)
M = (1'000,000)(1 + 0.04931507)
M = (1,000,000)(1.04931507)
M = 1'04,9,315.07
21. Find the a) actual and b) approximate or ordinary simple interest on a loan of
$1500 for 60 days, with 15% simple interest.
A) Real
Formula: I=C-i*t i=t
15% p.a. = 60 days
C= 1, 500 15% p.a. = 0.000410958%.
t= 60 days 365 days diary
25. At what simple annual interest rate does $2 500 accrue interest on $250 in 6
months?
Formula:
M_1 {=C t
C= 2, 500
t= 6 months
M= $250
0.5
0.1-1 annual = 6
I =------ months
0.5 6 = 0.5years
0.9 annual -
I =-
0.5
i = 1.8 % p.a.
250
2500
-1
In what time does $2,000 become $2,500 at 14% simple interest per year?
29. Mr. Martinez obtains a loan for $2,000 and pays after 8 months
$2,200. What simple monthly interest rate were you charged?
2,200
-1
2,000
0.666666666 annual = 8
1.1-1 =
months
8 0.6666666666666ye
0.666666666 annual - ars
0.1 12
Month Dias
June 15 to 30
July 15 to 30
August 15th 30
September 15 30
October 15th 30
November 15 30
TOTAL 180
35. A person purchases a blender costing $320 on August 14 and pays for it on November
26,
with a credit memo of $350. What exact simple annual interest rate did you pay?
i=t
annual = 104 days
annual 104 = 0.284931506years
0.284931506 365
1.09375-1 0.284931506
I =----------- i = 0.329026443 * 100
0.284931506
0.09375 i = 32.90264433% per annum
37. Find out what simple monthly interest rate is charged by a
department store on current credit accounts.
Santander:
- Fixed rate of 10%, 11%, 12% or 16% for the entire life of your loan if you contract
3 transactional products (POS, TDC, Payroll, Fundraising, Insurance or
Investment).