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Janet took out a loan of $50,000 from Bank of America at 8% on March 19, 2015, which is due on July 8, 2015.
Using exact interest, the amount of Janet's interest cost is:
$5,018.44
$2,561.44
$5,261.44
$5,216.44
None of these
 
A note dated Dec. 13 and due July 5 runs for exactly:
204 days
 
With interest of $1,832.00 and a principal of $16,000 for 206 days, using the ordinary interest method,
the rate is:
20%
 
Janet Home went to Citizen Bank. She borrowed $7,000 at a rate of 8%. The date of the loan was September 20.
Janet hoped to repay the loan on January 20. Assuming the loan is based on ordinary interest, Janet will
pay back how much interest on January 20?
$189.78
 
Banks and other financial institutions sometimes calculate simple interest based on:
Banker's rule, ordinary interest
 
Matty Kaminsky owns a new Volvo. His June monthly interest is $400.
The rate is 8 ½%. Matty's principal balance at the beginning of June is (use 360 days):
$56,470.59
 
Sandra Gloy borrowed $5,000 on a 120-day 5% note. Sandra paid $500 toward the note on day 40.
On day 90 she paid an additional $500. Using the U.S. Rule, her adjusted balance after the first payment is:
$4,527.78
 
The U.S. Rule:
Allows borrowers to receive interest credit
 
A $40,000 loan at 4% dated June 10 is due to be paid on October 11.
The amount of interest is (assume ordinary interest):
$546.67
 
Given interest of $11,900 at 6% for 50 days (ordinary interest), one can calculate the principal as:
$1,428,000.00
 
Federal Reserve banks as well as the federal government like to calculate simple interest based on
Exact interest
 
A $40,000 loan at 4% dated June 10 is due to be paid on October 11.
The amount of interest is (assume ordinary interest)
$546.67
 
Interest on $5,255 at 12% for 30 days (use ordinary interest) is
$52.55
 
Given interest of $11,900 at 6% for 50 days (ordinary interest), one can calculate the principal as
$1,428,000.00
 
Interest of $1,632 with principal of $16,000 for 306 days (ordinary interest) results in a rate of
12%
 
Which of the following is not true of the U.S. Rule?
 
Calculate interest on principal from date of loan to date of first payment.
Allows borrower to receive proper interest credits.
Can use 360 days in its calculations.
Can involve more than one payment before maturity date.
None of these
 
Jill Ley took out a loan for $60,000 to pay for her child's education.
The loan would be repaid at the end of eight years in one payment with interest of 6%.
The total amount Jill has to pay back at the end of the loan is
$88,800
 
At maturity, using the U.S. Rule, the interest calculated from the last partial payment is
Added to adjusted balance.
 
Interest is equal to
Principal · rate · time
 
Simple interest usually represents a loan of
One year or less
 
The U.S. rule states that when a partial payment is made, first the _____________ is covered,
then the balance goes to reduce the loan ___________.
Interest, Principal
 
What is the formula for finding Principal?
Interest ÷ rate · time
 
Justin borrowed $20,000 and paid back $22,000. Match the amounts to the terms.
Principal: $20,000
Interest: $2,000
Maturity Value: $22,000
 
States that any partial loan payment first covers and accumulated interest,
and the rmainder of the payment reduces the loan principal.
U.S. Rule
 
Simple interest loans are usually more than one year.
False
 
A note dated August 18 and due on March 9 runs for exactly:
203 days
 
In the U.S. Rule, the partial payment first covers the interest and the remainder reduces the principal.
True
 
A note dated Dec. 13 and due July 5 runs for exactly:
204 days
 
Joe Flynn visits his local bank to see how long it will take for $1,200 to amount to $2,100 at a simple
interest rate of 7%. The time is (round time in years to nearest tenth):
10.7 years
 
Sandra Gloy borrowed $5,000 on a 120-day 5% note. Sandra paid $500 toward the note on day 40.
On day 90 she paid an additional $500. Using the U.S. Rule, her adjusted balance after the first payment is:
$4,527.78
 
In calculating interest in the U.S. Rule from the last partial payment,
the interest is subtracted from the adjusted balance.
False
 
To convert time in days, it is necessary to multiply the time in years times 360 or 365.
True
 
Given interest of $11,900 at 6% for 50 days (ordinary interest), one can calculate the principal as:
$1,428,000.00

Chapter Tests             01  02  03  04  05  06  07  08  09  10  11  12  13  14  15  16 17 18  19  20  21  22                 Unit Test 01  02  03  04  05  06        

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