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Homework answers / question archive / MAT-143 LAB 4: Unit 8

**MAT-143 LAB 4: Unit 8.3-8.4**

**Unit 2, section 8.3: Simple Interest**

*How much simple interest will you pay with the following loans?*

- You borrow $5000 at a rate of 4% and must pay back in 5 years.
- You borrow $275 for 3 months at 0.032% per day. Assume 360 days per year.
- You borrow $365.45 at a rate of 11 ½ % and must pay back in 8 months.
- Your loan is for $4500 for 9 months, and your rate is per month.

*Future value of a loan is the total amount you will pay back, including principal and interest. The formula is: *

, *where A = future value and i is the simple interest. Find the future value of these loans:*

- P = $1500, r = 10%, t = 3 years.

- You borrow $1575 for 45 days at 0.024% per day. Assume 360 days per year.

- Joe borrowed $2700 from his uncle. His uncle asked Joe to pay him back $3100 at the end of four years. What is the interest rate being charged by Joe’s uncle, to the nearest tenth of a percent?

A. How much interest did Marianne pay for the use of the money?

B. How much did Marianne actually receive from the bank?

C. What was her actual annual interest rate?

10.** ** A 90-day loan of $2000 is made on October 1 for 90 days. On October 31, a payment of $800 is made. The balance is then paid off on the date the loan is due.

A. On what date is the loan due?

B. After making the partial payment, how much principal is left to pay?

- What is the total payment due on the date the loan is due?

- $4000 for 4 years at 3% compounded annually

A = P(1+r/n)^{nt}

A = ($4000 + 0.03/1)^{1}

- $4000 for 4 years at 3% compounded monthly

A = P(1+r/n)^{nt}

A = ($4000 + 0.03/12)^{12*4}

- $2500 for 2 years at 6.25% compounded quarterly

A = P(1+r/n)^{nt}

A = ($2500 + 0.0625/3)^{5}

- $2500 for 2 years at 6.25% compounded daily (use 360 days)

A = P(1+r/n)^{nt}

A = ($2500 + 0.0625/360)^{360*2}

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