BMTH 1003

HANDOUT #2
Simple Interest Applications
Professor: Hernando Burgos
Exercise
1) Determine each of the items listed from the information provided by the
promissory note

a.
b.
c.
d.

Date issued
Legal due date
Face value
Interest Rate

e. Interest period (days)

f. Amount of interest
g. Maturity value

2) Determine each of the items listed from the information provided by the
promissory note

a.

b.
c. Date issued
d. Legal due date

e. Face value
f. Interest Rate

MATH 1008. HANDOUT # 5.

Fall 2012

g. Interest period
(years)

h. Amount of interest
i. Maturity value

j.

3) For each of the following notes, determine: legal due date, the interest period in years,
the amount of interest, and the maturity value
a. The face value of a five-month, 6% note dated September 30, 2010 is $720
b. A note for $920 dated March 20, 2011, with interest at 5% per annum, is
issued for 120 days
c. A 60-day, 7.5% note for $1275 is issued January 31, 2009.
d. A five month, 4,75% note for $2000 is issued June 30, 2008
4) Use the future value formula to compute the maturity value of each of the following
promissory notes:
a.

A $3000 note is issued on October 30 , 2010 at

1
% for 90 days
4

b. A 150-day note for $410 with interest at 5% is dated June 28, 2009.
c. A seven-month, $1125 note dated November 1, 2011 earns interest at 7.5%.
d. A five-month, 6.18% note for $1670 is issued March 16, 2010
e. A $660 note is issued on November 19, 2012 at 7.5% for 101 days
5) Find the present value, on the date indicated, of each of promissory notes.
a. A six-month note for $510.00 dated April 9, 2012, with interest at 8% if money
is worth 7.2% on June 20, 2012
b. A non-interest-bearing note for $3600 dated March 25, 2010 for 183 days if
money is worth 5.63%, on June 7, 2010
c. A 95-day, 5.81% note for $7200 issued October 28, 2011, if money is worth
6.27% on November 30, 2011
6) What is the price of a 364-day, $10 000 Province of Ontario Treasury bill that yields
2.85% per annum?
7) What is the price of a 182-day, $250 000 Province of Alberta Treasury bill that yields
1.78% per annum?
8) What is the price of a 91-day, $100 000 Government of Canada Treasury bill that
yields 3.83% per annum?
9) On June 4 you bought for $24 767.75 a $25 000 Province of New Brunswick Treasury
bill maturating October 7. What was the interest rate at which you bought the bill?
10) Automotive Excellence Inc. borrowed $15 000 on August 12 with an interest of
6.75% per annum. On November 1, $5000 was repaid, and on December 15 $6775
was repaid. Automotive Excellence paid the balance of the loan on February 20. What
was the final payment?
11) D. Slipp borrowed $18 000 on August 12. She paid $7200 on November 1, $6000
on December 15, and the balance on February 20. How much did she pay on February
20 if the interest rate in the loan is 6.75%?