1. In the simple interest formula I = PRT, I stands for “dollar amount of interest.”
a. True
b. False
2. Suppose you borrow $3,000 at 7.25% interest for 14 months. What is the maturity value?
a. $253.75
b. $3,217.50
c. $3.253.75
d. $217.50
3. JoAnn gets a 6.5% $1,300 loan on October 25, 2007. If JoAnn repays the money on April 18, 2008 (a leap year), how much interest does she owe? Assume the lender uses a 365-day year.
a. $40.51
b. $40.28
c. $40.75
d. $40.98
4. You borrow $6,000 for 90 days at 6.5% interest. The lender uses a 365-day year. You make a payment of $1,400 on day 36 (36 days after getting the loan). Calculate your balance after the $1,400 payment is applied.
a. $1,361.53
b. $4,600.00
c. $4,696.16
d. $4,638.47