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    Sample Interest and Effective Rate Calulcation

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    8. A loan for $3,500 with a simple annual interest rate of 11% was made on September 5 and was due on November 21.
    Find the ordinary interest.

    9. Find the discount and proceeds on a $3,220 face-value note for three months if the discount rate is 9.5%. (Use the banker's rule.)

    11.Shanquayle Jenkins needs to calculate the effective interest rate of a simple discount note for $15,250, at an ordinary bank discount rate of 7.81%, for 70 days. Find the effective rate.

    13. A bank made a farmer a loan of $1,400 at 15% for three years compounded annually. Find the future value and the compound interest paid on the loan. Compare the compound interest with simple interest for the same period.

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    Solution Preview

    8. A loan for $3,500 with a simple annual interest rate of 11% was made on September 5 and was due on November 21. Find the ordinary interest.
    Principal=PV=$3500
    Interest Rate=r=11%
    Number of days=d=25+31+21=77
    Ordinary interest=PV*r*d/360=3500*11%*77/360=$82.35

    9. Find the discount and proceeds on a $3,220 face-value ...

    Solution Summary

    Solutions depict the steps to calculate ordinary interest, proceeds and compound interest.

    $2.19