Question 1:
a) State the simple interest formula and explain how simple interest is calculated.
b) Calculate the simple interest for a loan for $24,700, for 2 1/4 years at 3.4% interest per year. Round to the nearest cent.
c) How much is owed in total at the maturity date?
Question 2:
You decide to take out a loan for $12,500, at 4.25% yearly interest, on the date September 16. You will repay the loan on December 31st (at the end of the current year).
a) Exact time (days) of loan: _________
b) Using ordinary interest, calculate the interest and total owed.
c) Using exact interest, calculate the interest and total owed.
Question 3:
You decide to take out an ordinary interest loan of $3,600 at 5.4%, on a 90-day note.
a) In 45 days, you decide to make a payment of $1250 on the loan. What is your new principal? Explain how you got the answer.
b) How much did you pay at the end of the loan, overall? How does this differ from how much you would have paid, overall, had you not made a payment of $1250 after 45 days?
Question 4:
Find the bank discount and proceeds using ordinary interest on an unsecured promissory note made to Joan Williams for $10,000 at 5.5% annual simple interest from July 28 to September 10 for this year. Use the steps below to find your answers.
a) Explain the difference between a simple interest note and a simple discount note.
b) Exact time (days) of note: __________
c) What is the bank discount?
d) What are the proceeds Joan receives?
e) What is the amount Joan repays?
Need help with these questions. Please work them out for me to understand. This is business math.