Business Mathematics Study Set 1

Mathematics

Quiz 7 :

Applications of Simple Interest

Quiz 7 :

Applications of Simple Interest

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At the end of April, Brad had $7,500 in his daily interest savings account. On the 13th of May he deposited another $3,500. He made no other deposits or withdrawals in May. The simple interest rate throughout May was 3.7%. How much interest did Brad earn on this savings account in May?
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B

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A contract requires payments of $2,000 and $3,000, 90 days and 120 days, respectively, from today. What is the value of the contract today if the payments are discounted to yield a rate of return of 12% simple interest?
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B

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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?
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A

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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?
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What is the price of a $50,000, 182-day T-bill on its issue date if the market rate of return on this date was 6.875% simple interest?
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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?
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An investment will pay $3,000 six months from now. What purchase price will provide a rate of return of 12% simple interest?
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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.
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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.
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An investment earning 16% simple interest has a maturity value of $9,440.00 after eight months. What was the initial amount invested?
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What is the simple interest rate of a 7-month GIC that grows from $30,000 to its maturity value of $31,500?
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At the end of September Andy had $9,000 in his daily interest savings account. On the 12th of October he withdrew $4,000. He made no other withdrawals or deposits in October. The simple interest rate throughout October was 4.2%. How much interest did Andy earn on this savings account in October?
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How much simple interest would be earned by a six-month, $30,000 Guaranteed Investment Certificate at 5.7%?
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What simple interest rate was used to discount 270-day, $750,000 commercial paper when it was issued for $710,000?
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The current rates on 90- and 180-day GICs are 5.5% and 6% simple interest, respectively. An investor is trying to decide whether to purchase a 90-day GIC and then reinvest its maturity value in a second 90-day GIC. What would the interest rate on 90-day GICs have to be 90 days from now for the investor to end up in the same financial position with either alternative?
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On January 15, Mario signed a contract to pay Stephan $12,000 plus 9% simple interest on May 15 and $18,000 plus 10% interest on September 12. On August 15, Stephan then sold the first contract to Sally at a rate of 11% and the other contract to Anna for 12%. Determine the amount Stephan received on August 15.
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A 7-month, $75,400 Guaranteed Investment Certificate pays simple interest of 6.85%. Calculate the maturity value.
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Calculate the maturity value of a 300-day, $6,000 term deposit earning 5.15% simple interest.
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What will be the maturity value of $25,000 placed in a 90-day term deposit paying a simple interest rate of 4.75%?
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A 182-day, $250,000 Treasury Bill originally issued at 6.6% was sold at 5.9% simple interest, 82 days after it was issued. What was the selling price?
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