Use the simple interest formula $I=P \cdot r \cdot t$.

Rich borrowed $\$ 16,000$ for 12 years at simple interest to help pay for his schooling. If he repaid a total of $\$ 31,360$, at what interest rate did he borrow the money?

John and Susan just opened savings accounts at two different banks. They each deposited $\$ 1,000$. John's bank pays simple interest at an annual rate of $10 \%$, whereas Susan's bank pays compound interest at an annual rate of $9.5 \%$. No interest will be taken out of the accounts for a period of three years. At the end of three years, whose balance will be greater and by how much (to the nearest dollar)?

The total amount of money in a bank account paying compound interest can be determined by the formula $A=P\left(1+\frac{r}{n}\right)^{n t}$, where $P$ is the principal (amount deposited), $r$ is the annual rate of interest expressed as a decimal, $n$ is the number of times the interest is compounded in one year, and $t$ is the time in years. Determine the total amount of money in an account at the end of 4 months if the original sum deposited was $\$ 2550$, the interest rate is $8 \%$, compounded 4 times a year, and no money is deposited or withdrawn.

Fred’s credit union offers a simple interest home equity loan that uses a daily rate. For such loans, interest is computed using the following formula: (Loan balance) (daily rate)(days between payments) If Fred borrows $15,000 at a daily periodic rate of 0.000144 and he pays the loan off in one single payment of$18,153.60, how long was the term of the loan?

When interest is compounded quarterly (4 times a year) at an annual rate of 6%, the rate of interest for each quarter is $\frac{0.06}{4}$, and the number of times that interest is added in t years is 4t. After how many years will an investment of $100 compounded quarterly at 6% annually be worth at least$450? (Use the formula $A_n=A_0\left(1+\frac{r}{n}\right)^{n t}$.)

determine the time necessary for P dollars to double when it is invested at interest rate r compounded annually. f = 10%

If $25,000 is invested for 15 years compounded quarterly and grows to$52,680. Find the interest rate to the nearest percent.

At an interest rate of 8% per year, $50,000 today is Q equivalent to how much a year from now?

Find the error in the ad shown below, which appeared in a New York newspaper. [Hint: Check that the nominal rate is equivalent to the effective rate. For daily compounding, some banks use 365 days and some use 360 days in the year. Try it both ways.]

Find the present value of $59,673 due in 5 years at an interest rate of$8% / yea compounded continuously.

Use the formula and tax tables provided in this lesson to perform all computations. Find the effective federal income tax rate of a married couple with no children, who have a combined income of $34,000.

Ronald Allerton has just approached a venture capitalist for financing for a new business venture, the development of a local ski hill. On July 1, 2013, Ronald was loaned $140,000 at an annual interest rate of 8%. The loan is repayable over 5 years in annual installments of$35,064, principal and interest, due each June 30. The first payment is due June 30, 2014. Ronald uses the effective-interest method for amortizing debt. The ski hill company’s year-end will be June 30.

Instructions

(b) Prepare all journal entries for Ronald Allerton for the first 2 fiscal years ended June 30, 2014, and June 30, 2015. (Round all calculations to the nearest dollar.)

You are shopping for a $250,000, 30-year (360-month) loan to buy a house, The monthly payment is given by

$$m(r)=\frac{250,000(r / 12)}{1-(1+r / 12)^{-360}}$$

where r is the annual interest rate. Suppose banks are currently offering interest rates between 4% and 5%.

a. Show there is a value of r in (0.04,0.05)-an interest rate between 4% and 5%-that allows you to make monthly payments of $1300 per month.

b. Use a graph to illustrate your explanation to part(a). Then determine the interest rate you need for monthly payments of$1300.

Bulls Eye Stores constructed new stores during the current year. The average balance in the Construction-in-Process account excluding the current year’s capitalized interest costs was $3,400,000. Bulls Eye Stores engaged in borrowing directly related to these stores in the amount of$2,000,000, which carries an interest rate of 6%. Bulls Eye Stores has other borrowing outstanding totaling $8,000,000 at an average interest rate of 7%. Compute the amount of interest capitalized in the Construction-in-Process account during the current year.