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BUS 125 Business Math Chapter 10 Quiz
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Key Concepts:
Terms in this set (10)
Interest is equal to
Principal × rate × time
Simple interest usually represents a loan of
One year or less
Federal Reserve banks as well as the federal government like to calculate simple interest based on
Exact interest
A $40,000 loan at 4% dated June 10 is due to be paid on October 11. The amount of interest is (assume ordinary interest)
$546.67
(40000x.04x123/360=546.67.
note: Oct 11=284 days- June 10=161 days= 123)
Interest on $5,255 at 12% for 30 days (use ordinary interest) is
$52.55
Given interest of $11,900 at 6% for 50 days (ordinary interest), one can calculate the principal as
$1,428,000.00
[11900/.06x(50/360)]
Interest of $1,632 with principal of $16,000 for 306 days (ordinary interest) results in a rate of
12%
[1632/16000x(306/360)]
Which of the following is not true of the U.S. Rule?
A.Calculate interest on principal from date of loan to date of first payment
B. Allows borrower to receive proper interest credits
C. Can use 360 days in its calculations
D. Can involve more than one payment before maturity date
E. None of these
E. None of these
Jill Ley took out a loan for $60,000 to pay for her child's education. The loan would be repaid at the end of eight years in one payment with interest of 6%. The total amount Jill has to pay back at the end of the loan is
$88,800
(60000X.06X8=28800
60000+28800=88800)
At maturity, using the U.S. Rule, the interest calculated from the last partial payment is
Added to adjusted balance
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