30 Chapter 1 Simple Interest
- Justine paid $40.36 simple interest on a 45 days loan of $1,200. Interest was calculated using bankers’ rule. Find the
simple interest rate. - Bloomfi eld Chemical Company paid $40,000 in interest to settle a 6-month simple interest loan whose interest rate was
7.46%. How much did the company borrow? - Allegany City College offers a special program for students who have a short-term fi nancial need. The program allows
students to take out loans for short terms at a 3.5% simple interest rate. Robb borrowed $125 from this program, and
repaid $125.90. How long was the term of this loan? - A dentist purchased $14,763.25 in equipment for her offi ce. The supplier agreed to extend her credit, and allowed her
to pay 45 days later. At the end of the 45 days, she paid $15,000 even to settle the debt. What rate of simple interest
did she pay? - Find the simple interest rate if a 7-month loan of $8,000 resulted in interest of $473.02.
- Determine how long would it take for me to earn $10 simple interest from an investment of $7,354.29 if the simple
interest rate were ¾%. - Chan deposited $800 in a credit union certifi cate of deposit paying 4.21% simple interest. How long will it be before
her certifi cate is worth $820? - Convert 1.315946 years into days.
- The Computer Science Department at Aubuchon Community College wants to establish a scholarship that would award
$2,500 each year to a deserving student. In order to do this, the department plans to raise enough funds to create an
investment account that would earn $2,500 a year in interest, assuming a simple interest rate of 7%. How much does
the department need to reach this goal?
E. Additional Exercises
- Usury refers to the crime (or, in religious terms, sin) of charging excessive interest. In some religious traditions,
charging any interest at all is considered excessive and thus condemned as usury.^6 This is of course not the usual legal
interpretation in the United States. In the United States, usury is a crime, but “excessive” is defi ned by state law in most
cases, and the threshold for usury varies from state to state. The legal situation is further complicated by the fact that
the threshold for usury may vary, depending on the type of lender and/or borrower and/or the type of loan.
Suppose that the transactions below all occur in a state with a very straightforward usury law: the limit is a simple
interest rate of 25% regardless of the lender or loan type. In each case, guess whether or not the lender is guilty of
usury. Then calculate the simple interest rate to determine whether or not your guess was correct.
(^6) Some verses of the Bible (such as Deut 23:19 and Ezekiel 18) and Quran (such as Al-Baqara 2:275-280 and Al-’Imran 3:130) have also been read as
supporting this view. The predominant modern Christian and Jewish view has mellowed to allow for interest that is not exploitive, though many Muslims
still refuse to pay or accept interest (though other accommodations usually are made to compensate the lender).