Chapter 10 11 Test

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					                            CHAPTERS 10 AND 11 TEST
Student Name_____________________________              Score_______________________

                          Chapter 10          Simple Interest
Round all final answers to nearest cent.

1. Woody’s Cafe Real Estate tax of $1,110.85 was due on November 1, 2006. Due to
   financial problems, Woody was unable to pay his cafe real estate tax bill until January
   15, 2007. The penalty for late payment is 8 1 % ordinary interest. (A) What is the
   penalty Woody will have to pay and (B) what will Woody totally pay on January 15?

2. Angel Hall borrowed $82,000 for her granddaughter’s college education. She must
   repay the loan at the end of 9 years with 9 % interest. What is the maturity value
   Angel must repay?

3. On September 8, Pat Quinn borrowed $9,000 from Queen bank at 10       % interest. Pat
   plans to repay the loan on February 17. Assume the loan is on ordinary interest. How
   much will Pat repay on February 17?

4. Amy Koy met Pat Quinn (Problem No. 3) at Queen Bank. After talking with Pat, Amy
   decided she would like to consider the same loan on exact interest. Calculate the loan
   for Amy under this assumption.

                                                                 % interest. What is
5. Lou Valdez is buying a truck. His monthly interest was $155 at 10
   Lou’s principal balance after the beginning of November? Use 360 days. DO NOT
   round the denominator in your calculation.

6. Lisa Kane borrowed $8,000 on an 8% 60-day note. After 15 days, Lisa paid $2,000 on
   the note. On day 45, Lisa paid $1,000 on the note. What is the total interest and ending
   balance due by the U.S. rule? Use ordinary interest.
                                        Chapter 11
                      Structure of Promissory Notes, Simple Discount
                            Notes, and the Discounting Process

(A) Bank discount; (B) Proceeds for the following simple discount (use ordinary interest);
and (C) the effective interest rate to nearest hundredth percent. (Do not round
denominator in your calculation.

7. $9,000              14%             110 days                                      7. A. ___________
   (face)            (dis. rate)        (time)
                                                                                         B. ___________

                                                                                         C. ___________


Maturity value for this interest-bearing note using ordinary interest.

8. $42,000           79 days           13%                                           8. _____________

Complete the following for these interest-bearing notes that are discounted at 11%.

                     Rate of                  Maturiy   Note      Date Note   Discount
         Principal   Interest       Time       Value    Made     Discounted    Period      Proceeds

9.       $60,000       14%         60 days        A     July 5    July 20        B            C

10.      $90,000       10%         150 days       A     May 3     June 12        B            C

                                                                                      9. A. __________
                                                                                         B. __________
                                                                                         C. __________

                                                                                      10. A. _________
                                                                                         B. __________
                                                                                         C. __________

     11. Given the following, calculate the effective rate (to nearest hundredth percent).

           Treasury Bill $10,000
           Terms 13 week
           Rate 9%
                                                                                      11. ___________

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