Question 1

A bank offers 9% p.a. simple interest on an investment. At the end of 4 years the interest earned was $215. How much was invested?

Accepted Answer

I = (p x r x t)/100

Question 2

An amount of $255 was invested at 8.5% p.a. How long will it take, to the nearest year, to earn $86.70 in interest?

Accepted Answer

T = (100 x I)/ (P x r)

Question 3

Jaclyn buys $50 000 worth of debentures in a company. She earns 9.5% p.a. simple interest, paid to her quarterly (that is, every 3 months). If the agreed period of the debenture was 18 months: calculate the amount of interest Jaclyn will earn for ea…

Accepted Answer

I=(p x r x t)/100

Question 4

Townbank offers a term deposit account paying investors 12.5% p.a. simple interest on investments over $100 000 for 2 years or more. Peta decides to invest $150 000 in this account for 2 years. How much interest will Peta earn at the end of the inve…

Accepted Answer

I = (p x t x r)/100

Question 5

An investment bond is offered to the public at 9% p.a. Louise buys a bond worth $2000 that will mature in 2 years. How much in total will Louise receive at the end of the 2 years?

Accepted Answer

I = (P x r x t)/100 I = $360 A = P+I A = 2360

Question 6

A sapphire ring with a marked price of $1800 is offered to the purchaser on the following terms: $200 deposit and the balance to be paid over 24 equal monthly instalments with interest charged at 11.5% p.a. flat rate. Find the monthly repayments

Accepted Answer

Total repayment amount = $1600 + $368 = $1968 = $82 regular payment= total amount/number of repayments

Question 7

If there is a total of 104 weekly instalments and a thirddeposit, find the interest charged

Accepted Answer

Cash price = $3695 Deposit =1/3 of $3695 = $1231.67 Loan amount = $3695.00 − $1231.67 = $2463.33 Total cost of loan = $25.97 × 104= $2700.88 Interest charged = total amount − loan I = A − P = 2700.88 − 2463.33 = 237.55

Question 8

If there is a total of 104 weekly instalments and a third deposit, find the interest rate

Accepted Answer

R = (100 x I)/( P x T)

Question 9

If there is a total of 104 weekly instalments and a third deposit, find: the total cost of the computer

Accepted Answer

Total cost = deposit + loan + interest = 1231.67 + 2463.33 + 237.55 = $3932.55

Question 10

Determine the exact and ordinary simple interest on a 90-day loan of $8000 at 812 %

Accepted Answer

Exact interest, I= prt = $8000 × 0.085 × 90/365 = 167.67 Ordinary Interest, I= Prt = $8000 x 0.085 x 90/360 = 170

Question 11

You deposit $600 into a 6 month certificate of deposit. After 6 months the balance is $618. Find the simple annual interest rate.

Accepted Answer

I=prt

Question 12

Rondell's parents borrow $6,300 from the bank for a new car. The interest rate is 6% per year. How much simple interest will they pay if they take 2 years to repay the loan?

Accepted Answer

I=prt

Question 13

Derrick's dad bought new tires for $900 using a credit card. His card has an interest rate of 19%. If he has no other charges on his card and does not pay off his balance at the end of the month, how much money will he owe after one month?

Accepted Answer

I=prt

Question 14

An amount of 5,000 is invested at a fixed rate of 8 per cent per annum. What amount will be the value of the investment in five years time, if the interest is compounded every six months?

Accepted Answer

With slight modifications, the basic formula can be made to deal with compounding at intervals other than annually. Since the compounding is done at six-monthly intervals, 4 per cent (half of 8 per cent) will be added to the value on each occasion. Hence we use r = 0.04. Further, there will be ten additions of interest during the five years, and so n = 10. The formula now gives: V = P(1 + r)10 = 5,000 x (1.04)10 = 7,401.22 Thus the value in this instance will be £7,401.22. In a case such as this, the 8 per cent is called a nominal annual rate, and we are actually referring to 4 per cent per six months.

Question 15

Both S.I. and C.I. is calculated with a similar rate of 10% per annum on a sum of rupees. If C.I. is calculated yearly for two years, then for what period must S.I. be evaluated such that S.I. = C.I.?

Accepted Answer

Let time period of S.I. be T years. Then for a principal amount, say P, ATQ, as, S.I. = C.I. for rate =10%p.a. and time for C.I. = 2(P x 10 x T)/100 = P{[ (100+10)/100 ]2-1}T/10 = [ 110/100 ]2–1 = [(11/10)2–1] = (121-100)/100T/10 = 21/100T = 21/10 = 2.1 years

Simple Interest Questions