# Loan Interest and Maturity Value

1. Using the exact interest method (365 days), find the amount of interest on the following loan

Principal Rate (%) Time (days) Exact Interest

$1,700 12½ % 33

(Points : 2)

2. What is the maturity value of the following loan? Use MV = P(1 + RT) to find the maturity.

Principal Rate (%) Time Maturity Value

$120,740 11¾ % 7 months

(Points : 3)

3. Determine the number of days of the following loan.

Loan Date Due Date Number of Days

October 20 December 18

(Points : 2)

4. Determine the maturity date of the following loan.

Loan Date Time Loan (days) Maturity Date

May 15 111

(Points : 3)

5. Compute the principal for the following loan. (Round to the nearest cent, 2 places after decimal.)

Principal Rate (%) Time Interest

10½ % 10 months $5,900

(Points : 2)

6. Compute the rate for the following loan. Round your answer to the nearest tenth of a percent.

Principal Rate (%) Time Interest

$50,000 9 months $4,500

(Points : 2)

7. On May 23, Samantha Best borrowed $40,000 from the Tri City Credit Union at 13% for 160 days. The credit union uses the exact interest method. What was the amount of interest on the loan? (round to the nearest hundredth) (Points : 2)

8. Using the scenario from the previous question, calculate the maturity value of the loan. (round to the nearest hundredth) (Points : 3)

9. What is the maturity date of Samantha Best's loan? (Points : 2)

10. Katie Chalmers borrowed money from her credit union at 13.2% simple interest to buy furniture. If the loan was repaid in 2½ years and the amount of interest was $1,320, how much did Katie borrow? (Points : 3)

11. Alicia Eastman deposited $2,000 in a savings account at the Biltmore Bank paying 6% ordinary interest. How many years will it take for her investment to amount to $2,600? (Points : 3)

12. Using the scenario from the previous question, determine the maturity date of the loan. (Points : 2)

13. Varsity Press, a publisher of college textbooks, received a $70,000 promissory note at 12% ordinary interest for 60 days from one of its customers, Reader's Choice Bookstores. After 20 days, Varsity Press discounted the note at the Grove Isle Bank at a discount rate of 14.5%. The note was made on March 21. What was the maturity date of the note? (Points : 2)

14. Using the scenario from the previous question, calculate the maturity value of the note. (Points : 3)

15. What was the discount date of the note from the previous question? (Points : 3)

16. What proceeds did Varsity Press receive after discounting the note? (Points : 3)

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#### Solution Preview

1. Using the exact interest method (365 days), find the amount of interest on the following loan

Principal Rate (%) Time (days) Exact Interest

$1,700 12½ % 33 19.21

(Points : 2)

2. What is the maturity value of the following loan? Use MV = P(1 + RT) to find the maturity.

Principal Rate (%) Time Maturity Value

$120,740 11¾ % 7 months 128823.64

(Points : 3)

3. Determine the number of days of the following loan.

Loan Date Due Date Number of Days

October 20 December 18 60 days

(Points : 2)

4. Determine the maturity date of the following loan.

Loan Date Time Loan (days) Maturity Date

May 15 111 3 Sep 2013

(Points : 3)

5. Compute the ...

#### Solution Summary

The loan interest and maturity values are given. The exact interest methods are analyzed.

Problems on interest rate and yield to maturity

Interest rate and yield to maturity. You can use excel or financial calculator:

1. What is the fair value of a 2-year $100,000 T-note with no coupon payment if the current market interest rate is 10%?

2. If you obtain a 30 year mortgage loan of $100,000, find your monthly payment if annual interest rate is 3%, 5%, 10%.

3. You want to buy a 10% coupon bond with a face value of 100000 that yields 6% to maturity of 5 years. What is the price of the bond you want to buy?