Question

1. Calculate the simple interest.

Principal	Rate per Annum	Time	Simple Interest
$1356.78	8%	6 years
$685.43	9.25%	7 months
$1595.85	7.75%	185 days

2. Calculate the principal.

Simple Interest	Rate per Annum	Time	Principal
$1275.00	8.5%	3 years
$585.90	9.25%	5 months
$210.75	8.75%	63 days

3. Calculate the interest rate per annum correct to 1 decimal place.

Principal	Simple Interest	Time	Rate per Annum
$10,563.77	$7394.64	7 years
$6854.25	$433.53	11 months
$450.00	$7.22	66 days

4. Calculate the simple interest, then amount due.

Principal	Rate per Annum	Time	Simple Interest	Amount
$750.00	8%	5 years
$2765.95	10.5%	7 months

5. A debt of $450.00, principal and interest is to be paid in 9 months. If the current rate of interest is 7.6% per annum, calculate the amount that would cancel debt today.

6. Mark Wales made an investment of $5500. At the end of the year, he sold his investment for $5987.60. What annual rate of interest, correct to 2 decimal places, did his investment earn?

Please show the solution

Answer 1

SIMPLE INTEREST

Using Interest = (Principal × Rate × Time)/100 and Amount = P + SI

1.1356.78 × 0.08 × 6 = 651.25

2. t is 0.583333 (7/12). 685.43 × 0.0925 × 0.583333 = 36.98

3. t is 0.50684 (185/365) 1595.85 × 0.0775 × 0.50684 = 62.68

SIMPLE INTEREST AND AMOUNT DUE

1. 750 × 0.08 × 5 = 300. 750.00 + 300.00 = 1050.00

2. t is 0.583333 (7/12). 2765.95 × 0.105 × 0.583333 = 169.41. 2765.95 + 169.41 = 2935.36

PRINCIPAL

Using > Principal = (100 × Interest)/(Rate × Time)

1. P = (100*1275)/(8.5%*3) = 5000

2. P = (100*585.90)/(9.25%*(5/12)) = 15201.73

3. P = (100*210.75)/((8.75%*(63/365)) = 13954.42

RATE per annum

Using > Rate = (100 × Interest)/(Principal × Time)

1. R = (100*7394.64)/(10,563.77*7) = 10%

2. R = (100*433.53)/(6854.25*11/12) = 6.9%

3. R = (100*7.22)/(450*66/365) = 8.8 %

Amount that would cancel debt today :

Debt Amount = 450$

Time = 9/12 = 0.75

Interest rate = 7.6%

Principal + Interest = 475.65 (Using the above formulas)

Finding the present value of this amount would help us understand what the amount will be if debt is cancelled today. PV = 475.65/(1+0.076) = 442.0539

Annual rate of interest =(5987.60 - 5500)/ 5500 *100 = 8.865%