# Interest and Loan Concepts

Unit 3 focuses on interest and loan concepts covered in your reading of Chapter 11: “Simple Interest and Simple Discounts.”

You must show your work at all times. The steps for solving each problem must be explained. Failure to do so could result in your submission being given a 0 grade. If you have any questions about how much work to show, please contact your instructor.

Assignments must be submitted as a Microsoft® Word® document and uploaded to the Dropbox for Unit 3. Type all answers directly in this Assignment below each question.

All Assignments are due by Tuesday at 11:59 p.m. ET of the assigned unit.

Available Resources

One of the benefits of attending here at Kaplan is that we have a tremendous amount of resources available for you. If you find yourself having difficulties completing this exercise consider taking advantage on one or more of the following resources:

1. Textbook: The textbook reading assigned for each unit includes the topics and calculation details for each type of problems you will complete.

2. LiveBinders: In the LiveBinder for the unit, you will find more information on unit topics, example problems, and video content on the unit’s topics. To access the LiveBinder for a unit, use the menu on the left side of the classroom, select the unit you are in, and when you click the unit link several additional links will appear below the unit heading, one of those links will be “Live Binders.”

3. KU Math Center: Take advantage of the KU Math Center’s many services: a. Math Tutoring b. Question & Answer Services c. Request a Video Example Services d. Project Review Services (be sure to submit Assignments early enough to receive feedback and make corrections before the Assignment due date, 24 hour turn-around times Monday-Thursday and 48 hour turn-around times on weekends are typical). e. Math Center Reference Library

To access the KU Math Center start at the KU Campus Home Page. From the KU Campus Home Page, select My Studies (top menu bar), then select Academic Support Center, and review the Math Center offerings.

4. Email Your Instructor: Your instructor is only an email away; when you cannot make any more progress on a problem, reach out. Send your instructor the work you started and steps of the problem you have completed so far, and ask for help. Your instructor will respond within 24 hours.

Interest and Loan Concepts Assignment (Total 40 Points)

Question 1: (10 Points)

a) State the simple interest formula and explain how simple interest is calculated.

b) Calculate the simple interest for a loan for $39,545 for 3 1/2 years at 7.5% interest per year. Round to the nearest cent.

c) How much is owed in total at the maturity date?

Question 2: (10 Points)

You decide to take out a loan for $6,000, at 7% yearly interest on the date that Unit 4 starts. If you repay the loan on December 31st (at the end of the current year).

a) Exact time (days) of loan: __________

b) Using ordinary interest, calculate the interest and total owed.

c) Using exact interest, calculate the interest and total owed.

Question 3: (10 Points)

You decide to take out an ordinary interest loan of $30,000 at 4%, on a 90 day note.

a) In 45 days you decide to make a payment of $10,000 on the loan. What is your new principal? Explain how you got the answer.

b) How much did you pay at the end of the loan overall? How does this differ from how much you would have paid overall had you not made a payment of $10,000 after 45 days?

Question 4: (10 Points)

Find the bank discount and proceeds using ordinary interest on an unsecured promissory note made to Leslie Smith for $12,000 at 7% annual simple interest from June 15 to September 15 for this year. Use the steps below to find your answers.

a) Explain the difference between a simple interest note and a simple discount note.

b) Exact time (days) of note: __________

c) What is the bank discount?

d) What are the proceeds that Leslie Smith receives?

e) What is the amount Leslie Smith repays?

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