Exam
Name___________________________________
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
Answer the question.
1)
Acme Manufacturing Company needs to borrow $150,000.00 for 50 days to pay creditors.
One way to get the money would be by way of a simple interest note with a rate of 8% and
a principal of $150,000.00. At what discount rate would a simple discount note with
proceeds of $150,000.00 have to be given to match the simple interest note? Round to the
nearest ten–thousandths of a percent.
1)
2)
Under what circumstances would a business consider discounting a note?
2)
3)
You are going to borrow $71,500.00 for 72 days. You are to be loaned the money at an
interest rate of 9%, and you are given the option to choose exact or ordinary interest. Which
would you choose? Explain.
3)
4)
In your own words, define collateral. Give an example.
4)
5)
What is a simple discount note? Explain in your own words by way of a specific example.
5)
6)
When using a diagram to determine the proper formula for finding principal, interest, rate,
and time, is it necessary to put the I on top and P, R, and T on the bottom? Explain.
6)
7)
Explain how to find the effective interest rate for a simple discount note.
7)
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Solve the problem. Round dollar amounts to the nearest cent. Use ordinary interest unless otherwise indicated.
8)
Anita Tooms bought a new computer system. To pay for the system, she borrowed $5730 from the
credit union at 84
5% interest for 115 days. Find the interest.
8)
A)
$161.08
B)
$158.87
C)
$159.68
D)
$504.24
9)
HarbourTown Marina purchased four boat lifts for raising and lowering large boats into the water.
The boat lifts cost $62,200 each. They borrowed the money from the bank for 240 days at 11%. Find
the maturity value.
9)
A)
$267,045.33
B)
$66,761.33
C)
$276,168.00
D)
$69,042.00
Solve the problem.
10)
On June 7, Donaldson’s Trucking accepts a $2800 note in settlement of a bill. The note is for 150
days at 7% interest. Donaldson sells the note at a 11% discount rate on July 26. Find the proceeds.
10)
A)
$2825.07
B)
$2792.74
C)
$2766.88
D)
$2791.85
Find the interest and maturity value for the loan. Round to the nearest cent.
11)
$4252 at 6% for 10 months
11)
A)
$212.60; $4464.60
B)
$214.39; $4466.39
C)
$191.34; $4443.34
D)
$233.86; $4485.86
Find principal to the nearest dollar, rate to the nearest tenth of a percent, or time to the nearest day. Use banker’s interest.
12)
Hank Wilkins invested $5200 in a mutual fund containing bonds. Find the rate given that he earned
$257.83 in 210 days.
12)
A)
7.5%
B)
8%
C)
8.5%
D)
8.8%
Find the discount and proceeds on the simple discount note.
13)
Face value: $9800.00
Discount rate: 9%
Time (days): 60
13)
A)
Discount: $0.00
Proceeds: $9800.00
B)
Discount: $882.00
Proceeds: $8918.00
C)
Discount: $147.00
Proceeds: $9653.00
D)
Discount: $144.99
Proceeds: $9655.01
Solve the problem.
14)
The Gibralter Company loaned $5619 for 90 days to the Hazen Company for the purchase of
business supplies. The Gibralter Company sold the 7% simple interest note 46 days later at an 10%
discount rate. Find the discount period and the discount.
14)
A)
Discount period: 44 days
Discount: $68.91
B)
Discount period: 136 days
Discount: $215.99
C)
Discount period: 44 days
Discount: $69.88
D)
Discount period: 44 days
Discount: $67.47
Find the maturity date and proceeds. Round to the nearest cent.
15)
Face value: $2200
Discount rate: 93
4%
Date made: July 15
Time: 180 days
Maturity date: ?
Proceeds: ?
15)
A)
Maturity date: January 9
Proceeds: $2092.75
B)
Maturity date: January 11
Proceeds: $2307.25
C)
Maturity date: January 9
Proceeds: $2307.25
D)
Maturity date: January 11
Proceeds: $2092.75
Find principal to the nearest dollar, rate to the nearest tenth of a percent, or time to the nearest day. Use banker’s interest.
16)
Jackson Moving Co. borrowed $9400 for 125 days and paid $244.79 in interest. Find the rate of
interest on the loan.
16)
A)
7.5%
B)
7.7%
C)
8.0%
D)
7.0%
Find the interest and maturity value for the loan. Round to the nearest cent.
17)
$10,389 at 9.2% for 8 months
17)
A)
$716.84; $11,105.84
B)
$557.54; $10,946.54
C)
$637.19; $11,026.19
D)
$642.55; $11,031.55
Find the time (in days). Round to the nearest day.
18)
Principal: $2517
Rate: 7.5%
Interest: $83.90
18)
A)
160 days
B)
44 days
C)
162 days
D)
240 days
Find the discount period.
19)
Loan made: July 10
Length of loan: 180 days
Date of discount: Sep 6
19)
A)
125 days
B)
122 days
C)
58 days
D)
55 days
Find the date due and the maturity value.
20)
Date Loan Was Made Face Value Term of Loan Rate
June 3 $7779 85 days 10%
20)
A)
Date Due: Aug 28
Maturity value: $8556.90
B)
Date Due: Aug 27
Maturity value: $8051.27
C)
Date due: Aug 27
Maturity value: $7962.67
D)
Date Due: Aug 28
Maturity value: $7957.92
Answer the question about the promissory note given.
21)
— — — — — — — — Promissory Note—- ——————–
March 12
Ninety days after date above, I promise to pay to the order of Thomas Ronney $520 dollars and no
cents with interest at 13% per year, payable at Nations Bank Abercorn Branch.
Due: June 10 Signed: Fred Nester
————————————————————–
What is the maturity value of the note?
21)
A)
$536.90
B)
$520 and no cents
C)
$587.60
D)
13% per year
Find the rate. Round to the nearest tenth of a percent.
22)
Principal: $6000
Time: 90 days
Interest: $135.00
22)
A)
25.0%
B)
2.3%
C)
9.1%
D)
9.0%
Find the discount and proceeds on the simple discount note.
23)
Face value: $8000.00
Discount rate: 10%
Time (days): 30
23)
A)
Discount: $66.67
Proceeds: $7933.33
B)
Discount: $800.00
Proceeds: $7200.00
C)
Discount: $65.75
Proceeds: $7934.25
D)
Discount: $0.00
Proceeds: $8000.00
Find the principal. Round to the nearest cent.
24)
Rate: 8%
Time: 210 days
Interest: $33.08
24)
A)
$3308.00
B)
$70.89
C)
$708.86
D)
$758.86
25)
Rate: 8.5%
Time: 300 days
Interest: $14.67
25)
A)
$207.11
B)
$20.71
C)
$257.11
D)
$1467.00
The simple interest note was discounted at 15%. Find the discount period in days and the proceeds.
26)
Loan made: Jan 7
Face value: $3000
Length of loan: 120 days
Rate: 10%
Date of discount: Mar 7
26)
A)
61 days, $2948.33
B)
61 days, $2921.21
C)
61 days, $3021.21
D)
60 days, $3048.33
Find the maturity date and proceeds. Round to the nearest cent.
27)
Face value: $29,433
Discount rate: 11.5%
Date made: April 3
Time: 90 days
Maturity date: ?
Proceeds: ?
27)
A)
Maturity date: July 2
Proceeds: $28,598.39
B)
Maturity date: July 3
Proceeds: $28,598.39
C)
Maturity date: July 2
Proceeds: $28,586.80
D)
Maturity date: July 3
Proceeds: $28,586.80
Find the date due and the maturity value.
28)
Date Loan Was Made Face Value Term of Loan Rate
March 7 $1,475,171 18 days 11.2%
28)
A)
Date Due: March 23
Maturity value: $1,538,603.35
B)
Date due: March 25
Maturity value: $1,483,431.96
C)
Date Due: March 23
Maturity value: $1,476,823.19
D)
Date Due: March 25
Maturity value: $1,526,801.98
Find the exact interest to the nearest cent.
29)
$5830 at 82
5% for 189 days
29)
A)
$241.51
B)
$489.72
C)
$257.10
D)
$253.58
Find the date due and the maturity value.
30)
Date Loan Was Made Face Value Term of Loan Rate
August 26 $8 205 days 9%
30)
A)
Date due: March 19
Maturity value: $8.41
B)
Date Due: March 20
Maturity value: $8.72
C)
Date Due: March 20
Maturity value: $8.18
D)
Date Due: March 19
Maturity value: $8.31
Solve the problem.
31)
Jane Johnson buys a $30,000 T–bill at a 5.1% discount for 28 weeks. Find the purchase price of the
T–bill. (Assume 52 weeks per year.)
31)
A)
$28,352.31
B)
$29,093.77
C)
$29,176.15
D)
$29,588.08
Answer the question about the promissory note given.
32)
— — — — — — — — Promissory Note—- ——————–
March 12
Ninety days after date above, I promise to pay to the order of Thomas Ronney $590 dollars and no
cents with interest at 12% per year, payable at Nations Bank Abercorn Branch.
Due: June 10 Signed: Fred Nester
————————————————————–
Who is the maker of the note?
32)
A)
Nations Bank Abercorn Branch
B)
Fred Nester
C)
Not given
D)
Thomas Ronney
Find the principal. Round to the nearest cent.
33)
Rate: 7.5%
Time: 140 days
Interest: $87.30
33)
A)
$3034.71
B)
$2993.14
C)
$29.93
D)
$299.31
Find the interest and maturity value for the loan. Round to the nearest cent.
34)
$72,240 at 8% for 2.5 years
34)
A)
$13,870.08; $86,110.08
B)
$7604.21; $79,844.21
C)
$20,227.20; $92,467.20
D)
$14,448.00; $86,688.00
Answer the question about the promissory note given.
35)
— — — — — — — — Promissory Note—- ——————–
March 12
Ninety days after date above, I promise to pay to the order of Thomas Ronney $840 dollars and no
cents with interest at 13% per year, payable at Nations Bank Abercorn Branch.
Due: June 10 Signed: Fred Nester
————————————————————–
What is the face value of the note?
35)
A)
$4.83
B)
$840
C)
$1.61
D)
$19.32
Find the date due and the maturity value.
36)
Date Loan Was Made Face Value Term of Loan Rate
December 15 $5373 24 days 10.7%
36)
A)
Date Due: January 9
Maturity value: $5415.94
B)
Date Due: January 8
Maturity value: $5387.33
C)
Date Due: January 9
Maturity value: $5398.79
D)
Date due: January 8
Maturity value: $5411.33
Find the discount period.
37)
Loan made: Sep 12
Length of loan: 220 days
Date of discount: Mar 6
37)
A)
48 days
B)
172 days
C)
45 days
D)
175 days
Find the ordinary interest to the nearest cent.
38)
$13,190 at 10 5
8% for 81 days
38)
A)
$315.32
B)
$13,505.32
C)
$1401.44
D)
$311.43
Find the maturity value of the simple interest note.
39)
Face Value: $3618
Length of Loan: 281 days
Rate: 12%
39)
A)
$3951.05
B)
$3953.43
C)
$3956.89
D)
$3961.66
Find the exact number of days from the first date to the second. Assume that the second month is in the following year,
and assume no leap years.
40)
November 18 to May 3
40)
A)
166 days
B)
196 days
C)
165 days
D)
136 days
Solve the problem. Round rates to the nearest tenth of a percent, dollar amounts to the nearest cent, and time to the
nearest day.
41)
Mark Golden needs $9213.82 to pay for remodeling work. His bank loans money at a discount rate
of 7% for 180 days. Find the face value of a loan so he will have $9213.82.
41)
A)
$9858.79
B)
$9213.82
C)
$9543.26
D)
$9548.00
Solve the problem.
42)
A holder of a $3000, 9%, 120–day note dated June 5 decides to sell the note at a discount. The note is
sold on July 23 at a discount of 11%. Find the proceeds.
42)
A)
$2986.81
B)
$3021.08
C)
$3034.38
D)
$3022.02
Solve the problem. Round rates to the nearest tenth of a percent, dollar amounts to the nearest cent, and time to the
nearest day.
43)
Sam Peters signs a $4100 note. His bank charges a 10% discount rate. Find the effective rate charged
by the bank if the note is for 9 months.
43)
A)
10.9%
B)
10%
C)
9.7%
D)
10.8%
Find the exact interest to the nearest cent.
44)
$42,000 at 9% for 127 days
44)
A)
$1365.00
B)
$1333.50
C)
$1315.23
D)
$1346.30
Find the ordinary interest to the nearest cent.
45)
$15,000 at 11% for 90 days
45)
A)
$412.50
B)
$1650.00
C)
$407.92
D)
$15,412.50
Solve the problem.
46)
Henry Smith buys a $50,000 T–bill at a 5.6% discount for 28 weeks. Find the purchase price of the
T–bill. (Assume 52 weeks per year.)
46)
A)
$49,246.15
B)
$48,492.31
C)
$48,341.54
D)
$46,984.62
Find the date due and the maturity value.
47)
Date Loan Was Made Face Value Term of Loan Rate
April 14 $6957 157 days 93
4%
47)
A)
Date Due: September 18
Maturity value: $7117.01
B)
Date Due: September 19
Maturity value: $7527.47
C)
Date Due: September 18
Maturity value: $7172.67
D)
Date due: September 18
Maturity value: $7252.82
Find the ordinary interest to the nearest cent.
48)
$3380 at 7% for 266 days
48)
A)
$174.82
B)
$236.60
C)
$174.16
D)
$3554.82
Solve the problem. Round rates to the nearest tenth of a percent, dollar amounts to the nearest cent, and time to the
nearest day.
49)
A $9710 note is signed, for 190 days, at a discount rate of 6.5%. Find the proceeds.
49)
A)
$9381.46
B)
$9376.89
C)
$9078.85
D)
$9710.00
Find the discount and proceeds on the simple discount note.
50)
Face value: $17,230.00
Discount rate: 9.5%
Time (days): 190
50)
A)
Discount: $1636.85
Proceeds: $15,593.15
B)
Discount: $863.89
Proceeds: $16,366.11
C)
Discount: $852.06
Proceeds: $16,377.94
D)
Discount: $0.00
Proceeds: $17,230.00
Answer the question about the promissory note given.
51)
— — — — — — — — Promissory Note—- ——————–
March 12
Ninety days after date above, I promise to pay to the order of Thomas Ronney $660 dollars and no
cents with interest at 11% per year, payable at Nations Bank Abercorn Branch.
Due: June 10 Signed: Fred Nester
————————————————————–
What is the term of the loan?
51)
A)
June 10
B)
11% per year
C)
$660 dollars and no cents
D)
90 days
Solve the problem.
52)
Central Building Company borrowed $15,804 on a 280–day simple interest note to expand their
business. The note carried an interest rate of 7.0%. Find the maturity value of the note.
52)
A)
$15,888.87
B)
$14,943.56
C)
$16,676.56
D)
$16,664.44
Find the discount period.
53)
Loan made: Oct 29
Length of loan: 170 days
Date of discount: Jan 18
53)
A)
88 days
B)
82 days
C)
89 days
D)
81 days
Find the date due and the maturity value.
54)
Date Loan Was Made Face Value Term of Loan Rate
December 15 $21,165 126 days 12%
54)
A)
Date Due: April 21
Maturity value: $21,651.80
B)
Date Due: April 21
Maturity value: $22,223.25
C)
Date Due: April 20
Maturity value: $21,905.78
D)
Date due: April 20
Maturity value: $22,053.93
Find the maturity value of the simple interest note.
55)
Face Value: $7375
Length of Loan: 145 days
Rate: 11%
55)
A)
$7048.25
B)
$7407.23
C)
$7701.75
D)
$7706.36
Find principal to the nearest dollar, rate to the nearest tenth of a percent, or time to the nearest day. Use banker’s interest.
56)
Hargray Telephone earned $150.00 interest on a $20,000 deposit in an account paying 3%. Find the
number of days that the funds were on deposit.
56)
A)
91 days
B)
135 days
C)
25 days
D)
90 days
Answer the question about the promissory note given.
57)
— — — — — — — — Promissory Note—- ——————–
March 12
Ninety days after date above, I promise to pay to the order of Thomas Ronney $770 dollars and no
cents with interest at 12% per year, payable at Nations Bank Abercorn Branch.
Due: June 10 Signed: Fred Nester
————————————————————–
Who is the payee of the note?
57)
A)
Thomas Ronney
B)
Fred Nester
C)
Not given
D)
Nations Bank Abercorn Branch
Find the amount by which the ordinary interest is larger than the exact interest. Round to the nearest cent.
58)
$27,300 at 9% for 230 days
58)
A)
$21.50
B)
$32.00
C)
$1569.75
D)
$12.00
Find the exact interest to the nearest cent.
59)
$4500 at 12% for 130 days
59)
A)
$187.89
B)
$192.33
C)
$195.00
D)
$190.50
Find the discount period.
60)
Loan made: Aug 21
Length of loan: 150 days
Date of discount: Dec 15
60)
A)
115 days
B)
116 days
C)
34 days
D)
35 days
Find the proceeds to the nearest cent when the following is discounted.
61)
Maturity value: $7400
Discount period: 84 days
Discount rate: 10%
61)
A)
$6760.00
B)
$6660.00
C)
$7227.33
D)
$7229.70
Solve the problem. Round rates to the nearest tenth of a percent, dollar amounts to the nearest cent, and time to the
nearest day.
62)
Leon Harding receives proceeds of $5812 after signing a 90–day note for $5900. Find the discount
rate.
62)
A)
3.0%
B)
1.5%
C)
6.0%
D)
4.0%
63)
A note with a face value of $5200 was discounted at 7%. If the discount was $182, find the length of
the loan in days.
63)
A)
150 days
B)
183 days
C)
210 days
D)
180 days
Find the exact number of days from the first date to the second. Assume that the second month is in the following year,
and assume no leap years.
64)
July 16 to January 29
64)
A)
198 days
B)
190 days
C)
197 days
D)
195 days
First, find the initial proceeds of the simple discount note. Then, find the discount period, the discount, and proceeds
after discounting.
65)
Date Loan Was Made: Jan. 22
Maturity Value: $40,000
Length of Loan: 60 days
Rate: 10%
Date of Discount: Mar. 9
Discount %: 10%
65)
A)
Initial Proceeds: $39,333.33;
Discount Period: 14 days;
Discount: $155.56;
Proceeds After Discount: $39,844.44
B)
Initial Proceeds: $39,333.33;
Discount Period: 14 days;
Discount: $800.00;
Proceeds After Discount: $79,844.44
C)
Initial Proceeds: $119,333.33;
Discount Period: 16 days;
Discount: $1022.22;
Proceeds After Discount: $119,844.44
D)
Initial Proceeds: $79,333.33;
Discount Period: 16 days;
Discount: $844.44;
Proceeds After Discount $79,844.44
Find the time (in days). Round to the nearest day.
66)
Principal: $6430
Rate: 11.5%
Interest: $205.40
66)
A)
28 days
B)
101 days
C)
100 days
D)
150 days