The Mathematics of Money

28 Chapter 1 Simple Interest

EXERCISES 1.3

A. Finding Principal

1. Find the principal for a loan if the term is 2 years, the simple interest rate is 9%, and the interest totals $63.00.


2. I would like to be able to earn $500 in interest from a certifi cate of deposit over the next 18 months. Wellsburg Savings and
   Loan is offering a simple interest rate of 3.275% on 18-month CDs. How much would I need to deposit to achieve my goal?


3. Weston Corporation states in its fi nancial report that the company earned $1,275 in interest from a 6-month loan to the
   company’s CEO. It also reports that the simple interest rate for the loan was 7½%. How much did the company loan
   the CEO?


4. Because of a clerical error, the paperwork for a loan Simon took out at Protection National Bank failed to list the
   amount he borrowed. It did, however, specify that the term of the loan would be 100 days, simple interest would be
   paid at a rate of 12.63%, the interest would be calculated using bankers’ rule, and the total interest would be $49.12.
   How much did Simon borrow?


5. The Capital City School District states in its proposed budget that it expects to need to take out a loan for 45 days
   late in the school year to cover cash fl ow needs while the district waits to receive its state aid payment. The budget
   document also states that this fi gure assumes a simple interest rate of 3.8%, and the amount the district has budgeted
   for interest on this loan is $3,000. The budget document does not state how much the district will need to borrow, but
   as a concerned citizen you would like to know this. How much is the district planning to borrow?


6. How much does Na need in her investment account if she wants to be able to receive $450 per month in income from
   it, assuming a simple interest rate of 7½%?

B. Finding the Simple Interest Rate

Where necessary, round interest rates to two decimal places. When using days, use the simplifi ed exact method (365 days per

year) unless otherwise specifi ed.

7. Convert each of the following decimals to a percent:

a. 0.0453 d. 1.043

b. 0.1011 e. 0.1825

c. 0.1043 f. 0.1

8. Find the simple interest rate for a loan if the principal is $5,000, the term is 2 years, and the interest totals $600.


9. Ahmed lent Chris $100. Two months later, Chris gave Ahmed a total of $105 to pay off the loan. What rate of simple
   interest did Chris pay?