Question 1

A 90-day non-interest-bearing promissory note for $3,300 is dated August 1. What would be a fair selling price of the note on September 1 if money can earn 7.75% simple interest?

Accepted Answer

The answer of A 90-day non-interest-bearing promissory note for $3,300...

Question 2

The purchaser of a 168-day T-bill with a face value of $100,000 paid $98,929.92 for it. After 50 days, interest rates had increased and she sold the T-bill at 2.85% simple interest. What price did she receive for the T-bill?

Accepted Answer

The answer of The purchaser of a 168-day T-bill with...

Question 3

A 4-month Guaranteed Investment Certificate with a face value of $55,000 will have a maturity value of $56,100. What simple annual interest rate is it carrying?

Accepted Answer

A)  6.00% 
B)  10.20% 
C)  2.00% 
D)  8.00% 
E)  20.00%

Question 4

Calculate missing value for the promissory note:

Accepted Answer

The answer of Calculate missing value for the promissory note:
...

Question 5

Calculate the price on its issue date of $100,000 face value, 90-day commercial paper issued by G E Capital Canada if the prevailing market rate of return is 0.932 simple interest%.

Accepted Answer

The answer of Calculate the price on its issue date...

Question 6

270-Day Commercial Paper with a face value of $500,000 was sold 206 days after it was issued at a price that would provide a simple rate of interest to the purchaser of 9.85%. What was the price?

Accepted Answer

A)  $473,668 
B)  $508,636 
C)  $491,511 
D)  $527,796 
E)  $490,929

Question 7

An assignable loan contract executed 3 months ago requires two payments of $3,200 plus interest at 9% from the date of the contract, to be paid 4 and 8 months after the contract date. The payee is offering to sell the contract to a finance company in order to raise urgently needed cash. If the finance company requires a 16% simple interest rate of return, what price will it be prepared to pay today for the contract?

Accepted Answer

The answer of An assignable loan contract executed 3 months...

Question 8

Liam had $5,200 in student loans. On August 9, he began repayments of $50 per month when simple interest rates were 9.2% annually. On September 8, the interest rates rose to 9.5%. By what amount will the principal be reduced given the $50 payment on September 30?

Accepted Answer

A)  $8.90 
B)  $9.91 
C)  $10.90 
D)  $11.90 
E)  $12.90

Question 9

How much simple interest would be earned by a six-month, $30,000 Guaranteed Investment Certificate at 5.7%?

Accepted Answer

A)  $143 
B)  $696 
C)  $763 
D)  $855 
E)  $978

Question 10

Marcie has a $20,000 personal line of credit with an interest rate of prime + 3%. On the last day of each month, a payment equal to the greater of $500 or 4% of the current balance (including the current month's accrued interest) is deducted from her chequing account. On December 6, she withdrew $5,000. On January 15, she withdrew $12,000. The prime rate during this time was 3%. Prepare a loan repayment schedule up to and including February 28.

Accepted Answer

The answer of Marcie has a $20,000 personal line of...

Question 11

On April 7, Madeline had $10,500 in student loans outstanding. She agreed to $75 per month payments to repay these loans. From April 7 to May 5, the interest rates were 3.25%, but increased to 4.5% thereafter. Calculate the amount of simple interest paid for the month of May.

Accepted Answer

A)  $37.93 
B)  $38.01 
C)  $38.14 
D)  $38.88 
E)  $39.25

Question 12

On February 1, John signed a contract to pay Janet $4,500 plus interest on April 2 and $5,500 plus interest on July 31. Both payments carried a 6.5% simple interest annually. Janet then sold both contracts to Fred on May 1 at a rate of 4.5% annually. Determine how much she received.

Accepted Answer

A)  $10,145.20 
B)  $10,300.18 
C)  $10,451.07 
D)  $10,618.30 
E)  $11,863.54

Question 13

If you purchase an investment privately, how do you determine the maximum price you are prepared to pay?

Accepted Answer

The answer of If you purchase an investment privately, how...

Question 14

Calculate the maturity value of a 300-day, $6,000 term deposit earning 5.15% simple interest.

Accepted Answer

A)  $5,756.34 
B)  $6,253.97 
C)  $6,309.00 
D)  $6,111.78 
E)  $7,021.99

Question 15

Beth borrowed $5,000 on demand from Canada Trust on February 23 for a Registered Retirement Savings Plan (RRSP) contribution. Because she used the loan proceeds to purchase Canada Trust's mutual funds for her RRSP, she received a special interest rate of prime plus 0.5%. Beth was required to make fixed monthly payments of $1,000 on the 15^th of each month, beginning April 15. The prime rate was initially 4.75%, but it jumped to 5% effective June 15 and increased another 0.25% on July 31. (It was not a leap year.) Construct a repayment schedule showing the amount of each payment and the allocation of each payment to interest and principal.

Accepted Answer

The answer of Beth borrowed $5,000 on demand from Canada...

Question 16

Calculate missing value for the promissory note:

Accepted Answer

The answer of Calculate missing value for the promissory note:
...

Question 17

What will be the maturity value of $25,000 placed in a 90-day term deposit paying a simple interest rate of 4.75%?

Accepted Answer

A)  $24,710.58 
B)  $25,396.77 
C)  $25,292.81 
D)  $25,306.77 
E)  $25,302.57

Question 18

A $100,000, 182-day Province of New Brunswick Treasury bill was issued 66 days ago. What will it sell at today to yield the purchaser 2.48% simple interest?

Accepted Answer

The answer of A $100,000, 182-day Province of New Brunswick...

Question 19

What is the simple interest rate of a 7-month GIC that grows from $30,000 to its maturity value of $31,500?

Accepted Answer

A)  5.00% 
B)  8.16% 
C)  8.57% 
D)  8.95% 
E)  9.88%

Question 20

An investment will pay $3,000 six months from now. What purchase price will provide a rate of return of 12% simple interest?

Accepted Answer

A)  $2,830.19 
B)  $3,180.00 
C)  $2,000.00 
D)  $2,500.00 
E)  $2,724.17

Exam 7: Applications of Simple Interest

A 90-day non-interest-bearing promissory note for $3,300 is dated August 1. What would be a fair selling price of the note on September 1 if money can earn 7.75% simple interest?

The purchaser of a 168-day T-bill with a face value of $100,000 paid $98,929.92 for it. After 50 days, interest rates had increased and she sold the T-bill at 2.85% simple interest. What price did she receive for the T-bill?

A 4-month Guaranteed Investment Certificate with a face value of $55,000 will have a maturity value of $56,100. What simple annual interest rate is it carrying?

Calculate missing value for the promissory note:

Calculate the price on its issue date of $100,000 face value, 90-day commercial paper issued by G E Capital Canada if the prevailing market rate of return is 0.932 simple interest%.

270-Day Commercial Paper with a face value of $500,000 was sold 206 days after it was issued at a price that would provide a simple rate of interest to the purchaser of 9.85%. What was the price?

Liam had $5,200 in student loans. On August 9, he began repayments of $50 per month when simple interest rates were 9.2% annually. On September 8, the interest rates rose to 9.5%. By what amount will the principal be reduced given the $50 payment on September 30?

How much simple interest would be earned by a six-month, $30,000 Guaranteed Investment Certificate at 5.7%?

On April 7, Madeline had $10,500 in student loans outstanding. She agreed to $75 per month payments to repay these loans. From April 7 to May 5, the interest rates were 3.25%, but increased to 4.5% thereafter. Calculate the amount of simple interest paid for the month of May.

On February 1, John signed a contract to pay Janet $4,500 plus interest on April 2 and $5,500 plus interest on July 31. Both payments carried a 6.5% simple interest annually. Janet then sold both contracts to Fred on May 1 at a rate of 4.5% annually. Determine how much she received.

If you purchase an investment privately, how do you determine the maximum price you are prepared to pay?

Calculate the maturity value of a 300-day, $6,000 term deposit earning 5.15% simple interest.

Calculate missing value for the promissory note:

What will be the maturity value of $25,000 placed in a 90-day term deposit paying a simple interest rate of 4.75%?

A $100,000, 182-day Province of New Brunswick Treasury bill was issued 66 days ago. What will it sell at today to yield the purchaser 2.48% simple interest?

What is the simple interest rate of a 7-month GIC that grows from $30,000 to its maturity value of $31,500?

An investment will pay $3,000 six months from now. What purchase price will provide a rate of return of 12% simple interest?