32.
Jack Simpson owes Dale Peterson $1000 which is four months overdue, $2000 which is
three months overdue and $1500 which is due today. Simpson now wishes to sign a three month
non-interest bearing note to cover all the debts. If a 6% interest rate is u
1. A man owes (a) $1,000 due in three months and (b) $2,000 due in seven months. He and his
creditor agree to settle the debt by 2 equal payments, one in five months and the other in 11
months. Find the size of each payment if money is worth 6% and the co
Carol Miller went to Europe and forgot to pay her $740 mortgage payment on her new
Hampshire ski house. For 59 days overdue on her payment, the bank charged her a penalty
of $15. What was the rate of interest charged by the bank? Round to the nearest
hun
64. $1,000 is invested at the beginning of a year in an account that pays interest at 8%
compounded semiannually. How much will the $1,000 grow to by the end of the first year? What
is the annual effective interest?
65. Which will grow to a greater value
Diane Van Os decided to buy a new car since her credit union was offering such low interest
rates. She borrowed $32,000 at 3.5% on December 26, 2012 and paid it off February 21,
2014. How much did she pay in interest? (10-14)
On September 12, Jody Jansen
76. A $4,000 bond, interest at 4% payable semiannually, redeemable in 2 years, is purchased
to yield 3% interest compounded semiannually. Find the purchase price and premium.
78. Doyle invested $5000 for 15 years. The interest rate is 4% compounded semian
b. Construct the loan amortization schedule for payments 11 and 12. (Hint: find the remaining
obligation after the 10
th
payment to start your table.)
c. Assume the same facts as above. At the end of the seventh year, you decided to refinance the
remainde
11. A debt of $2000 is due in four months and money is worth 20%.
What is the value of the debt if it is paid at month 1? _
What is the value of the debt if it is paid at month 4? _
What is the value of the debt if it is paid at month 6? _
What is the val
Chapter 9 Review
In each of the following cases, find the unknown values using ordinary interest and using only
the formulas on your formula card:
Principal
Annual
Time
Interest
Amount
Interest Rate
1
$100
8%
90 days
?
?
2
$1500
10%
? days
$100
?
3
$1440
71. Find the size of the periodic payment and the outstanding principal at the indicated time for
the following
situation:
Debt: $5,000
Number of Payments: 18
Payment frequency: monthly
Compound Interest rate: 12% monthly
Required Outstanding Principal: a