Download V. Simple interest

V. Simple interest
In problems 1-6, find the requested value and tell what the other numbers
1.- Find I:
I = 5500(0.06)(2)
2.- Find I:
I = 2,250(0.04)(3)
3.- Find r:
250 = 1000(r)(4)
4.- Find t:
1500 = 5000(0.05)(t)
5.- Find P:
9600 = P + P(0.05)(4)
6.- Find P:
11,800 = P + P(0.03)(6)
7.- $10,000 is invested for 6 years at an annual simple interest rate of 16%.
a) How much interest will be earned?
b) What is the future value of the investment at the end of the 6 years?
8.- $800 is invested for 5 years at an annual simple interest rate of 14%
a) How much interest will be earned?
b) What is the future value of the investment at the end of the 5 years?
9.- $1000 is invested for 3 months at an annual simple interest rate of 12%
a) How much interest will be earned?
b) What is the future value of the investment after 3 months?
10.- $1800 is invested for 9 months at an annual simple interest rate of 15%
a) How much interest will be earned?
b) What is the future value of the investment after 9 months?
11.- If you borrow $800 for 6 months at 16% annual simple interest, how much must you repay at the
end of the 6 months?
12.- If you borrow $1600 for 2 years at 14% annual simple interest, how much must you repay at the
end of the 2 years?
13.- If you lend $3500 to a friend for 15 months at 8% annual simple interest, find the future value of
the loan.
14.- Mrs. Gonzalez lent $2500 to her son Luis for 7 months at 9% annual simple interest. What is the
future value of this loan?
15.- A couple bought some stock for $30 per share that pays an annual dividend of $0.90 per share.
After 1 year the price of the stock was $33. Find the simple interest rate on the growth of their
investment.
16.- Jenny Reed bougth ATT stock for $16 per share. The annual dividend was $1.5 per share, and
after 1 year SSX was selling for $35 per share. Find the simple interest rate of growth of her
money.
17.- a) to buy a Treasury bill (T-bill) that matures to $10,000 in 6 months, you must pay $9,750. What
rate does this earn?
b) If the bank charges a fee of $40 to buy a T-bill, what is the actual interest rate you earn?
18.- Janie Christopher lent $6,000 to a friend for 90 days at 12%. After 30 days, she sold the note to a
third party for $6000. What interest rate did the third party receive? Use 360 days in a year.
19.- A firm buys 12 file cabinets at $140 each, with the bill due in 90 days. How much must the firm
deposit now to have enough to pay the bill if money is worth 12% per year? Use 360 days in a
year
20.- A student has a savings account earning 9% simple interest. She must pay $1500 for firstsemester tuition by September 1 and $1500 for second-semester tuition by January 1. How much
must she earn in the summer (by September 1) in order to pay the first-semester bill on time and
still have the remainder of her summer earnings grow to $1500 between September 1 and January
1?
21.- If you want to earn 15% annual simple interest on an investment, how much should you pay for a
note that will be worth $13,500 in 10 months?
22.- What is the present value of an investment at 6% annual simple interest if it is worth $832 in 8
months?
23.- If $5000 is invested at 8% annual simple interest, how long does it take to be worth $9000?
24.- How long does it take for $8500 invested at 11% annual simple interest to be worth $13000?
25.- A retailer owes a wholesaler $500,000 due in 45 days. If the payment is 15 days late, there is a
1% penalty charge. The retailer can get a 45-day certificate of deposit (CD) paying 6% or a 60day certificate paying 7%. Is it better to take the 45-day certificate and pay on time or to take the
60-day certificate and pay late with the penalty?
26.- An investor owns several apartment buildings. The taxes on these buildings total $30,000 per
year and are due before April 1. The late fee is 1/2% per month up to 6 months, at which time the
buildings are seized by the authorities and sold for back taxes. If the investor has $30,000
available on March 31, will he save money by paying the taxes at that time or by investing the
money at 8% and paying the taxes and the penalty on September 30?
27.- Bill Casler bougth a $2000, 9-month certificate of deposit (CD) that would earn 8% annual simple
interest. Three months before the CD was due to mature, Bill needed his CD money, so a friend
agreed to lend him money and receive the value of the CD when it matured.
a) What is the value of the CD when it matures?
b) If their agreement allowed the friend to earn a 10% annual simple interest return on his loan to
Bill, how much did Bill receive from his friend
28.- Suppose you lent $5000 to friend 1 for 18 months at an annual simple interest rate of 9%. After 1
year you need money for an emergency and decide to sell the note to friend 2.
a) How much does friend 1 owe when the loan is due?
b) If your agreement with friend 2 means she earns simple interest at an annual rate of 12%, how
much did friend 2 pay you for the note?