The Mathematics of Money

Copyright © 2008, The McGraw-Hill Companies, Inc.

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CHAPTER 1

EXERCISES

The following exercises are a mixture of problems from the topics covered in Chapter 1. One of the objectives of doing these

exercises is to be able to correctly identify which topics and tools from this chapter are needed for each problem. All of the

material covered in this chapter is fair game, except for topics that were identifi ed as optional.

1. Find the amount that you would need to deposit at a simple interest rate of 8.45% in order to earn $200 in 3 months.


2. Express 5^7 / 8 % as a decimal.


3. Mike loaned Jim $2325.17 for 80 days at 7 ½% simple interest. Find the total amount Jim will have to repay.


4. How long would it take for $1,835 to grow to $2,000 at 9.31% simple interest?


5. On January 7, 2005, Ming-zhu borrowed $186,547 at 11.35% simple interest. The note that he signed came due on
   October 29, 2005. Find the note’s maturity value.


6. I borrowed $80 and paid $100 when the loan came due. How much interest did I pay?


7. If a note is signed on December 17, 2005, and matures on April 13, 2007, fi nd its term.


8. Ingrid invested $12,500 at 4.35% simple interest for 300 days. If bankers’ rule is used to calculate interest, how much
   interest did she earn?


9. Lockwell Lockers Company borrowed $182,600 at 6^5 / 16 % simple interest on July 15, 2004. The note that the company
   signed matured on February 3, 2005. How much interest did the company pay?


10. Johanna borrowed $350 for 100 days. She paid $375 in total to settle the loan when it came due on September 25.
    Find (a) the amount of interest she paid and (b) the date the loan was taken out.


11. Find the maturity date and maturity value of the following promissory note.

I hereby acknowledge a loan of $5,235.17 made to me on

October 11, 2005, and agree to pay this loan back in 300 days,

together with simple interest calculated at a rate of 12½%.