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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.

#### 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