[1] Sam agrees to make a payment of $1,000.00 in 3 months at 8% simple interest. How much money is Sam borrowing today?
[2] Alixe borrowed $5,000 today at 12% simple interest. How much will she owe the bank when she pays off the debt in 180 days?
[3] Myrna borrowed $5,000 from the bank some time ago at 9% simple interest. She paid off the loan today with one payment of $5,675. How many months ago did she borrow the $5,000? (Hint: it’s easier to use I = Prt.)
[4] You would like to save to purchase a Kia automobile. You deposit $3,500 into a GIC that pays 8% interest, compounded quarterly. You need to save at least $5,000 to buy the car. If you make no more contributions, how many years will it take you to reach your goal?
[5] Lindsay made an investment of $1,500.00 42 months ago. It is now worth $2,110.65. What nominal rate of interest, compounded semiannually, did this investment earn?
[6] Answer the following
(a) What nominal rate, compounded semiannually, is equivalent to 9% compounded quarterly?
(b) What nominal rate, compounded monthly, is equivalent to 9% compounded quarterly?
(c) What nominal rate, compounded quarterly, is equivalent to 12% compounded annually?
[7] A debt of $6,000 due today and $8,000 due 2.5 years from today is to be paid off with two payments. The first payment is to be made six months from today, and a second payment, $5,000 larger than the first, 15 months from today. What should the two payments be if money is worth 9%, compounded quarterly? Use 15 months as the focal date.
[8] Pavel was supposed to pay $10,000 today. Instead, he arranged with the bank to pay $3,000 12 months from today, followed by two equal payments in 18 months and in 30 months from today. The interest rate is 8% compounded quarterly. Calculate the size of each payment. Use 30 months as the focal date.
[9] Anna borrowed $3,000 from her line of credit 8 months ago and a further $5,000 3 months ago. She arranged with the bank to pay off the line of credit with two payments. The first payment, 6 months from today, will be twice as large as the second payment made one year from today. The bank charges you 9% interest, compounded monthly. Use 6 months as the focal date.
(a) Find the size of each payment.
(b) How much interest will she pay?
[10] A debt of $15,000 is due today. Instead, the borrower agrees to make one payment of $5,000 in 6 months and 2 equal payments in 3 months and 12 months from today, with simple interest charged at 6%. What is the size of each payment? Use 6 months as the focal date.
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