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- Question
A merchant receives an invoice for a motor boat for $20 000 with terms 4/30, n/100. What is the highest simple interest rate at which he can afford to borrow money in order to take advantage of the discount?
Options- A. 247.67
- B. 237.67
- C. 227.67
- D. 215.67
- Correct Answer
- 247.67
ExplanationSuppose the merchant will take advantage of the cash discount of 4% of $20 000 = $800 by paying the bill within 30 days from the date of invoice. He needs to borrow $20 000 = $800 = $19 200. He would borrow this money on day 30 and repay it on day 100 (the day the original invoice is due) resulting in a 70-day loan. The interest he should be willing to pay on borrowed money should not exceed the cash discount $800.
r=I/pt=21.73%
The highest simple interest rate at which the merchant can afford to borrow money is 21.73%. This is a break-even rate. If he can borrow money, say at a rate of 15%, he should do so. He would borrow $19 200 for 70 days at 15%. Maturity value of the loan is $19 200(1+0.15(70/365))=$19 752.33
savings would be $20 000 ? $19 752.33 = $247.67
- 1. How long will it take $3000 to earn $60 interest at 6%?
Options- A. 2months
- B. 3months
- C. 4months
- D. 5months Discuss
- 2. loan of $15 000 is taken out. If the interest rate on the loan is 7%, how much interest is due and what is the amount repaid if the loan was taken out on April 7 and is due in seven months
Options- A. 13615.52
- B. 14615.52
- C. 15615.52
- D. 16615.52 Discuss
- 3. Jason decides to borrow money for a holiday. If a personal loan is taken over 4 years with equal quarterly repayments at 12% p.a. flat rate (simple interest), calculate the effective rate of interest.
Options- A. 22,588
- B. 32.588
- C. 42.588
- D. 43.588 Discuss
- 4. Car is purchased on hire-purchase. The cash price is $21 000 and the terms are a deposit of 10% of the price, then the balance to be paid off over 60 equal monthly instalments. Interest is charged at 12% p.a. What is the total cost of the car?
Options- A. 30.240
- B. 31.240
- C. 33.240
- D. 32,240 Discuss
- 5. 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 total amount collected at the end of the term.
Options- A. 8125
- B. 9125
- C. 7125
- D. 6125 Discuss
- 6. Find the principal which yields $25,000 when invested at 3% annually for 20 years.
Options- A. 13841.89
- B. 14821
- C. 13468
- D. 57389 Discuss
- 7. Question : What is the sum which earned interest ? Statements : a. The total simple interest was Rs. 9000 after 9 years. b. The total of sum and simple interest was double of the sum after 6 years.
Options- A. Only a is sufficient
- B. Neither a nor b is sufficient
- C. Only b is sufficient
- D. Both a and b sufficient Discuss
- 8. An amount doubles itself in 15 years. what is the rate of interest ?
Options- A. 7.85 %
- B. 9.41%
- C. 6.66 %
- D. 4.21 % Discuss
- 9. Althaf borrows Rs. 1500 from two moneylenders. He pays interest at the rate of 12% per annum for one loan and at the rate of 14% per annum for the other. The total interest he pays for the entire year is Rs. 186. How much does he borrow at the rate of 12% ?
Options- A. Rs. 300
- B. Rs. 400
- C. Rs. 1200
- D. Rs. 1100 Discuss
- 10. Raghu has invested Rs. 1000 and received Rs. 1300 at 6% per annum simple interest after X years. Find thevalue of X.
Options- A. 4 years
- B. 3 years
- C. 2 years
- D. 5 years Discuss
Simple Interest problems
Search Results
Correct Answer: 4months
Explanation:
t=I/pr
Correct Answer: 15615.52
Explanation:
I = prt = [15000 × 0.07 × (214/365) ]=615.52
Future value, S = P + I = $15 000 + $615.52 = $15 615.52
Correct Answer: 22,588
Explanation:
Flat rate = 12%
n = 4 × 4
= 16
Effective rate =2n/(n+1) × flat rate
Correct Answer: 32,240
Explanation:
Total cost = deposit + instalment amount × number of instalments
Correct Answer: 7125
Explanation:
total interest=1187.50*6
Correct Answer: 13841.89
Explanation:
Correct Answer: Both a and b sufficient
Explanation:
Let the sum be Rs. x
a. gives, S.I = Rs. 9000 and time = 9 years.
b. gives, Sum + S.I for 6 years = 2 x Sum
--> Sum = S.I for 6 years.
Now, S.I for 9 years = Rs. 9000
S.I for 1 year = Rs. 9000/9 = Rs. 1000.
S.I for 6 years = Rs. (1000 x 6)= Rs. 6000.
--> x = Rs. 6000
Thus, both a and b are necessary to answer the question.
Correct Answer: 6.66 %
Explanation:
Let the principle be Rs. P
As the amount double itself the interest is Rs. P too
So P = P x r x 15/100
=> r = 100/15 = 20/3 % = 6.66 %.
Correct Answer: Rs. 1200
Explanation:
Let Althaf lent Rs. A at 14% per year.
Hence, Money lent at 12% = (1500-A);
Given, total interest = Rs. 186.
{(A x 14x 1)/100} + {[(1500-A) x 12 x 1/100]} = 186;
14A/100 + (18000 -12A)/100 = 186;
14A + 18000 - 12A = 186x100;
2A = 18600-18000;
A = 600/2 = Rs. 300.
Hence, money lent at 12% = 1500-300 = Rs. 1200.
Correct Answer: 5 years
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