psy hw exam 3 pt2

Scott Family Grocer borrowed $8,000 for 100 days at 15% simple discount rate. How much are the proceeds?

$7,666.67

Jose invested $50,000 at 12% for 4 years compounded annually. What is the maturity value at the end of Year 3?

$70,246.40

Wright invested $500 at 7% compounded daily for 6 years. What is the future value of his investment? Use the compounded daily table, 360-day basis.

$760.95

Scott Family Grocer borrowed $8,000 for 100 days at 15% simple interest. What is the maturity value?

$8,333.33

You compound $1 for 3 years at 12% interest. Match the interest rate for each period to the respective compounding periods. Instructions

1%- Monthly (12%/ 12 months= 1% per period) 3%- Quarterly (12%/ 4 times per year= 3% per period) 6%- Semiannual (12%/2 times per year= 6% per period) 12%- Annual (12%/ 1 times per year= 12% per period)

Ida purchased $100,000 in 1 year Treasury bills at 3%. Match the amounts to their respective terms.

1. 1 year- time 2. 3%- simple discount rate 3. 3.09- effective rate 4. 3,000- discount 5.97,000- purchase price 6. 100,000- face value

On January 5 Angston signed a note to Jimenez Contracting for $6,000 at 6% for 180 days. On January 25 Jimenez Contracting discounted the note to Wenatchee Valley Bank at 5%. Match the values with the respective terms.

1. 137.33- bank discount 2. 160 days - dsicount period 3. 180- interset 4. 6,042.67- proceeds 5. 6,180- maturity value

Jason takes out a $10,000, 180-day, 4% simple discount note. Match the values to the respective terms. Instructions

1. 4%- simple discount rate 2. 4.08- effective rate 3. 180 days- time 4. 200- bank discount 5. 9,800- proceeds 6. 10,000- maturity value

Organize the steps in making a partial payment of a loan before the due date. Instructions

1. Calculate interest on principal from date of the loan to the date of the 1st principle payment 2. Apply partial payment to interest due and the rest of the payment to principal 3. Calculate interest on adjusted balance from the previous payment date to the new payment date. 4. At maturity, calculate interest from the last payment made. Add this interest to the adjusted balance.

Order the steps in calculating the compound amount and interest manually. Instructions

1. Calculate the simple interest and add it to the principle. Use this total for the next year. 2. Repeat the calculation of the simple interest plus the principal for the total number of periods. 3. Compound amount - Principle = Compound Interest.

Order the steps for calculating the compound amount using the table. Instructions

1. find the number 2. find the rate 3. find the intersection 4. multiply

Match the simple discount note terms to their respective definitions.

1. proceeds- The amount the borrower receives after the bank deducts the interest from the maturity value. 2. simple discount rate- A note where the interest has been deducted in advance. 3. bank discount- The amount of interest that the bank deducts in advance. 4. bank discount rate- The percent of interest used in determining the discount amount.

Select the terms with the definitions of a Treasury bill(T-bill).

1. purchase price- the value of the T-bill less the discount 2. discount- the interest of the T-bill 3. maturity value- the face value of the T-bill 4. effective rate- the actual interest rate

Rosebud Mbela borrowed $400 at 5% for 28 days. Match the amounts to the terms (use exact interest). Instructions

1.53 interest 400 principle 28/365 time 5% interest rate 401.53 maturity value

$1 is compounded semiannually for 5 years at 2% interest. How many periods will this result in?

10

Given principal of $100 and a rate of 10%, match the number of years to the amount of interest earned using simple interest. Instructions

10 20 30

Marchaund borrowed $4,500 for 90 days, with a 12% simple discount rate. What is the effective rate?

12.37%

Treasury bills are a loan to the federal government for

13 weeks

Douglas loaned Pat $1,000 for 60 days at 8%. Using ordinary interest method, match the amounts to the terms. Instructions

13.33 interest amount 60/360 time 8% annual interest rat 1,000 principle 1013.33 maturity value

jim ryan

14,888.90

jim ryan

14,901.25

Jefferson loaned Gracey $8,000 at 10%. Gracey's interest is $400. How long was the term of the loan (use ordinary interest)?

180

When interest is compounded semiannually, interest is calculated how many times per year?

2

Feliz borrowed $2,000 for 5 years at 6%. Using the simple interest formula, how much will he need to pay at the end of the loan?

2,600

Justin borrowed $20,000 and paid back $22,000. Match the amounts to the terms. Instructions

20,000 principal 2,000 interest 22,000 maturity value

You compound $1 for 3 years at 4% interest. Match the number of periods to the respective compounding periods. Instructions

3- Annual 6- Semiannual 12- Quarterly 36- Monthly

claire russell

32,516

Karen borrowed $13,000 from Scott at 3.5% for 287 days. How much is the interest for the loan using the exact-days method?

357.77

Martina borrowed $10,000 for 100 days. At the end of the term, she paid back $11,000. Match the terms (use ordinary interest). Instructions

36% rate 1,000 interest amount 10,000 principle 100/360 time

$1 is compounded semiannually for 10 years at 8% interest. What is the interest rate per period?

4

Franklin & Sons issued a $5,000, 60-day note to Jefferson Inc. Match each of the values to the respective terms.

5,000 maturity value 60 time 0 interest

Elizabeth borrowed $5,000 for 9 months at 8%. How much is the maturity value?

5,300

Using the Rule of 72, how many years will it take to double your investment at 12% per year?

6

Determine the effective rate of $1 invested at 6% compounded semiannually.

6.09

On September 3 Crankston Supply signed a note to Beachum & Sons for $900 on an amount owed. The note carried a 8% interest rate for a term of 90 days. On September 22, Beachum & Sons. discounted the note for 6% to Bank of Wheatland. What is the discount period?

71

Treyvon loaned Chris $3,500 for 45 days earning $35 in interest. What interest rate did he charge? (use 360 days)

8

ann hopkins

86,400

Order the steps in discounting a note. Instructions

C. Calculate the interest and maturity value. A. Calculate the discount period. D. Calculate the bank discount B. Calculate the proceeds.

Match the promissory note terms to their respective definitions. Instructions

Face Value: Amount of money borrowed Term: Length of time that the money is borrowed. Rate: The annual percentage for the cost of borrowing money. Maker: The company issuing the note and borrowing the money Payee: The company extending the credit Maturity: Date that the principal and interest are due Date: Date that the note was issued.

Select the equation for finding maturity value of an interest-bearing note.

Face value + Interest

Select the equation for finding maturity value of an non-interest-bearing note.

Face value = maturity value

Select the formula for finding Principal.

I/(RxT)

Jody gave Mickey a loan at 7% for 180 days (ordinary interest), earning $90. Drag and drop the term against their corresponding values.

I/(RxT) Principal Formula 7% Annual Interest Rate $90 Interest180/360 Time $2,571.43 Principal $2,661.43 Maturity Value

expense is the cost of borrowing money.

Interest

Mae's Music Shop asked School District 4 to sign a note on an outstanding balance on music instruments. Mae's Music Shop needed the funds before the date of the note's maturity and discounted the note at the Bank of Wallace. Which party retains a contingent liability in the event that the note is dishonored?

Mae's Music Shop

Match the formula to the Simple Interest variable. Instructions

P + I Maturity Value P x R x T Interest I/(RxT) Principal I/(PxT) Rate I/(PxR) Time

Match the Simple Interest terms with their respective definitions.

Principal <---->The original amount borrowed. Interest <---->The cost of the loan. Rate <---->The annual percentage growth of the loan. Time <----> The term of the loan. Maturity value<->The amount due at the end of the term.

Franklin & Sons issued a $5,000, 6%, 60-day note to Jefferson Inc. Match each of the values to the respective terms. Instructions

State Interest: 6% Face Value: $5,000 Time: 60 Days Interest: $50 Maturity Value: $5050

Consider which option results in a higher effective rate. Bank A offers 4% compounded annually. Bank B offers 4% compounded quarterly.

bank b

The amount that the bank charges to take over the note and is deducted from the maturity value is the

bank discount

The potential liability that may or may not result from discounting a note is called a

contingent liability

Federal Reserve banks and the federal government use the

exact

True or false: The APY (annual percentage yield) is different from the effective rate.

false

Compounding calculates the

future

Present value starts with what an item is worth in the

future, present

Compound interest results in

greater

Future value table factors are numbers (greater/less)

greater

Given the equation, A = P(1 + i)N, match the abbreviation to the respective compounding term. Instructions

i- Rate per Period A- Compound Amount N- Number of Periods P- Principal

The U.S. Rule states that when a partial payment is made, first the

interest principal

Match the note type to the maturity value definitions.

interest bearing- maturity value= face value + interest non interest bearing- maturity value+ face value

The simple interest formula is used to calculate which type of note?

interest-bearing notes

Present value table factors are numbers

less

Principal plus interest is the

maturity value

Which compounding term results in the most number of times that the interest is calculated in a year?

monthly

Continuous compounding results in

more

Ordinary interest results in more/less

more

lorna hall's

penalty pay 27.23 total amount 2,038.11

Compounding goes from

present future

indicates that the borrower will repay a specified sum at a fixed time in the future.

promissory note

Step 2 in calculating present value by table lookup is to find the

rate

Simple interest concepts apply when you are paying interest or

receiving

Treasury bills(T-bills) are what type of note?

simple discount note

The cost of a loan where the interest is only on the principal or the amount borrowed is

simple interest

Compound interest is the interest on

the principal plus the interest of prior periods

A discounted note is an example of a

three-party transaction

Present value answers the question, "How much do I need to invest

today

A loan to the federal government to raise money is a

treasury bill

True or false: Although simple discount notes have an interest component, they are sometimes referred to as non-interest-bearing notes.

true