The Mathematics of Money

2. Harry borrowed $5,255 from Ron for 200 days at a simple interest rate of 12.25%. Then, 80 days later, Ron sold the
   note to Hermione, using a simple discount rate of 9.28%. Find (a) the maturity value of the note and (b) the amount
   Hermione paid.


3. Audra borrowed $2,750 from Thierry for 100 days at a simple interest rate of 16%. When 30 days were left until
   maturity, Shawn offered to buy the note, using a simple discount rate of 12%. How much did Shawn offer for the
   note?


4. Estimable Comestibles Catering borrowed $8,000 from Allegany Federal Credit Union at a simple interest rate of
   10.3%. The term of the note was 220 days; 90 days later, the note was sold to Limestone Capital Venture Corp. at
   a simple discount rate of 11.4%. What proceeds did Allegany Federal receive from the sale?

B. Secondary Sales with Dates

5. On January 16, Dan borrowed $10,000 to upgrade the ovens at his pizzeria. The note matured on November 15 of the
   same year, and the simple interest rate was 9.92%. The note was sold on March 25, at a simple discount rate of 8¼%.
   Find the proceeds from this sale.


6. Tien borrowed $2,500 from Kevin on February 11, 2007. The note matured on July 5, 2007, and the simple interest
   rate was 15.02%. On February 26, Kevin sold the note to Byron at a simple discount rate of 9.31%. How much did
   Byron pay?


7. Neela loaned Davis $6,000 on October 18, 2005. The term of the note was 200 days, and the simple interest rate was
   6.75%. On November 23, 2005, she sold the note to Vic at a simple discount rate of 12.81%. How much did Neela get
   from Vic?


8. On April 30, 2006, Wayneport General Hospital borrowed $538,000 from Macedon Funding Corp. The note’s maturity
   date was February 7, 2007, and the simple interest rate was 4.59%. On October 16, 2006, the note was sold to
   Palmyra Mutual Investment Company with a simple discount rate of 6.00%. Find the proceeds of the sale.

C. Measuring Actual Interest Earned

In each exercise, assume that no additional sales of the notes took place. That is, assume that the secondary buyer in each

exercise held onto the note until maturity.

9. In Exercise 1, fi nd the actual simple interest rate (a) earned by Troupsburg Trust, (b) earned by Jasper Savings Bank,
   and (c) paid by Colline.


10. In Exercise 2, fi nd the actual simple interest rate (a) earned by Ron, (b) paid by Harry, and (c) earned by Hermione.


11. In Exercise 3, fi nd the actual simple interest rate (a) earned by Shawn, (b) earned by Thierry, and (c) paid by Audra.

Exercises 2.3 77

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