Level 1
Chapter 10 – Section I – Exercise 6
Find the amount of interest on a loan with principal $13,200, Rate 9.2%, and time
of 4 3/4 years.
Level 2
Chapter 10 – Section I – Exercise 14
Use the exact interest method (365 days) and the ordinary interest method
(360 days) to compare the amount of interest for the following loan.
Level 1
Chapter 10 – Section I – Exercise 20
Find the amount of interest and the maturity value of the following loan: Principal
is $91,000, the rate is 9 1/4%, and the time is 2 1/2 years.
Level 2
Chapter 10 – Section I – Exercise 43
What is the maturity value of a $60,000 loan, for 100 days, at 12.2% interest, using
the exact interest method?
Level 3
Chapter 10 – Assessment Test – Exercise 48
You are the accounting manager for Kool Ragz, Inc., a manufacturer of men’s and
women’s clothing. The company needs to borrow $1,800,000 for 90 days in order to
purchase a large quantity of material at “closeout” prices. The interest rate for such
loans at your bank, Rimrock Bank, is 11% using ordinary interest.
a. What is the amount of interest on this loan?
b. After making a few “shopping” calls, you find that Southside National Bank will lend at 11%,
using exact interest. What is the amount of interest on this offer?
c. In order to keep your business, Rimrock bank has counteroffered with a loan at
10.5%, using ordinary interest. What is the amount of interest on this offer?
d. (Challenge) If Southside National wants to beat Rimrock‘s last offer (part c) by $1,250, what
rate, rounded to the nearest hundredth percent, must they quote, using exact interest?
Level 3
Chapter 10 – Section II – Exercise 27
Kendall Motors, a Buick dealership, borrowed $225,000 on April 16 to
purchase a shipment of new cars. The interest rate was 9.3% using the ordinary
interest method. The amount of interest was $9,600.
a. For how many days was the loan?
Note: Use Excel’s Roundup function when you calculate the number of days.
b. What was the maturity date of the loan?
Level 1
Chapter 10 – Section II – Exercise 28
Mike Drago took out a loan for $3,500 at the Community Bank for 270 days. If the bank
uses the ordinary interest method, what rate of interest was charged if the amount
of interest was $269? Round your answer to the nearest tenth of a percent.
Level 2
Chapter 10 – Section II – Exercise 29
Tiffany Francis borrowed money to buy a car at 13.5% simple interest from her
credit union. If the loan was repaid in 2 years and the amount of interest was $2,700,
how much did Tiffany borrow?
Level 1
Chapter 10 – Section II – Exercise 34
Steve Perry borrowed $10,000 at 12% ordinary interest for 60 days. On day 20 of the
loan, Steve made a partial payment of $4,000. What is the new maturity value of the loan?
Level 1
Chapter 10 – Section III – Exercise 5
Calculate the bank discount and proceeds for a $7,800 simple discount
note at 8 1/4% for 130 days. Use the ordinary interest method, 360 days, when applicable.
Level 2
Chapter 10 – Section III – Exercise 25
Calculate the interest, purchase price, and effective interest rate of a $100,000, 4.15%,
26 week Treasury bill. Round effective interest rate to the nearest hundredth of a percent.
Level 1
Chapter 10 – Section III – Exercise 28
Pinnacle Manufacturing received a $40,000 promissory note at 12% simple interest
for 95 days from one of its customers. On day 70, Pinnacle discounted the note
at the Berryville Bank at a discount rate of 15%. The note was made on
September 12.
a. What is the maturity date of the note?
b. What is the maturity value of the note?
c. What is the discount date of the note?
d. What proceeds did Pinnacle receive after discounting the note?
Level 1
Chapter 10 – Assessment Test – Exercise 28
On May 23, Samantha Best borrowed $4,000 from the Northeast Credit Union
at 13% for 160 days. The credit union uses the exact interest method.
a. What was the amount of interest on the loan?
b. What was the maturity value of the loan?
c. What is the maturity date of the loan?
Level 2
Chapter 10 – Assessment Test – Exercise 30
Katie Chalmers borrowed money to buy furniture from her credit union at 13.2% simple interest.
If the loan was repaid in 2 1/2 years and the amount of interest was $1,320, how much did
Katie borrow?
Level 2
Chapter 10 – Assessment Test – Exercise 32
Alicia Eastman deposited $2,000 in a savings account at the Biltmone Bank paying 6%
ordinary interest. How long will it take for her investment to amount to $2,600?
Level 3
Chapter 10 – Assessment Test – Exercise 33
Laurie Carron borrowed $16,000 at 14% ordinary interest, for 88 days. On day 30
of the loan, she made a partial payment of $7,000. What is the new maturity value
of the loan?
Level 2
Chapter 10 – Assessment Test – Exercise 35
Brandi Lee signed a $30,000 simple discount promissory note at the Signature Bank. The
discount rate was 13% ordinary interest, and the note was made on August 9 for 95 days.
a. What proceeds did Brandi receive on the note?
b. What was the maturity date of the loan?
c. What was the effective interest rate of the note? Round the answer to the nearest
hundredth of a percent.
Level 3
Chapter 10 – Assessment Test – Exercise 38
You are the accountant for Suite Dreams, a retail furniture store. Recently, an order of
sofas and chairs was received from a manufacturer with terms of 3/15, n/45. The order
amounted to $230,000, and Suite Dreams can borrow money at 13% ordinary interest.
a. How much can be saved by borrowing the funds for 30 days to take advantage of
the cash discount? (Remember, Suite Dreams only has to borrow the net amount due,
after the cash discount is taken.)
b. What would you recommend?