L8: Simple interest application

A five-month promissory note is issued on June 30.  The legal due date is:  

• December 1

• November 30

• December 3

• November 3

A non-interest bearing note has a face value of $3000.  The note is due 96 days from today.  Money is currently worth 8% per annum.  Find the purchase price of the note.

• $2938

• $3063

• $2778

• $2923

A 182-day T-bill has a maturity value of $100,000.  The purchase price is $98,140 when the yield rate is 3.8% p.a.  The amount of interest earned is: 

• $1865

• $1860

• $3729

• $1900

Blended payments on a $4000 loan were $425 per month.  Interest was charged at 6.2% per annum calculated on the unpaid balance.  How much of the first payment goes to the loan principle?

•   $20.67

• $404.33

• $425.00

• $248.00

A loan is paid off with a series of partial payments using the declining balance approach.  Which of the following statements is true?

• The payment is applied to the outstanding principal first.

• The payment is applied to the accumulated interest first.

• The payment is applied to principal and interest in equal amounts

• The interest is always calculated on the original amount of the loan.