20 Chapter 1 Simple Interest
a loan for the cost of the job for 1 year at 10% simple interest. How much interest would the storeowner pay if she
accepted this offer?- A volunteer ambulance company was conducting a fund drive to buy a new ambulance when the old one broke down
entirely and had to be replaced. The fund drive was going well, but the company had not yet reached its goal, and so
could only pay for part of the cost of the new ambulance. They fi nanced the remaining $22,453 with a 5-month loan
at 8.23% simple interest. Find the amount they will need to raise to pay off this loan. - Gustavo borrowed $2,400 for 1 year at 12.253% simple interest. How much will he need to repay the loan?
- Calculate the simple interest on a $47,539 loan at 14 ¾% for 211 days.
E. Additional Exercises
- Three years ago, Andre opened a CD at Hopewell National Bank with a deposit of $3,000. The certifi cate pays a simple
interest rate of 5.58%. The term of the certifi cate will end 1 year from now. What will the value of his account be at that
time? - 45 days ago, Liam borrowed $800 from Tammy at 14% simple interest. He will pay her back 120 days from now. How
much interest will he owe Tammy at that time? - Two months from now Jessaca will repay a loan that she took out 7 months ago. The principal was $450 and the simple
interest rate is 10.3%. How much will she need to repay the loan? - Suppose that you deposit $500 at 4% simple interest for 20 days. How much interest will you earn?
a. If interest is calculated using bankers’ rule.
b. If interest is calculated using the simplifi ed exact method.
- Assuming that the simple interest rate is the same either way, would a borrower prefer bankers’ rule or the exact
method? Which would a lender prefer? - Ralph deposited £2,948.35 in the Bank of Old South Wales for 200 days at 5.77% simple interest. (Note: £ is the
symbol for British pounds.) How much was his account worth at the end of the term? - Suppose that you deposited $2,000 in a 100-day certifi cate of deposit near the end of 2007. The simple interest rate is
7.22%, and the bank calculates interest using the exact method, using the exact number of days in the year. Thirty-nine
days of the certifi cate’s term fell in 2007, which was not a leap year; the rest fell in 2008 which was a leap year. Calculate
the interest for this deposit.