ALWAYS COUNT DAYS FOR PROMISSORY NOTES!!!

SIMPLE INTEREST FORMULA'S

Interest: I = PRT

Maturity Value: S = P + I

Maturity Value or Future Value: S = P (1 + rt)

Principal Value or Present Value: P = S

---------

(1 + rt)

Number of days in a month:

January 31 February 28 March 31 April 30 May 31 June 30 July 31 August 31 September 30 October 31 November 30 December 31

1) Fill in the missing values in the chart below. (1 mark each-4 total)

	Principal (P)	Rate (r)	Time (t)	Interest (I)
a.	$5,000	9 % p.a.	292 days
b.		5 % p.a.	26 months	$1,597.92
c.	$10,800	% p.a.	1.25 years	$1,653.75
d.	$800	9 % p.a.	_______months	$126.00

2) A 7-month promissory note with a face value of $20,000 was issued on March 12,2021, at 9 % p.a., determine. (4 marks total)

a. the maturity date (1 mark)

b. the number of days it was issued for (1 mark)

c. the interest on the note (1 mark)

d. the maturity value of the note (1 mark)

3) An $80,000 demand loan was taken out on April 10 from the CIBC Bank at a cost of 9% p.a. The demand loan agreement provided for a final payment on December 24, and payments of $25,000 on June 13 and $30,000 on September 7. Using the declining balance method, how much must be paid on December 24? (6 marks)

a. How much is owing on June 13^thafter the payment?

b. How much is owing on September 7^thafter the payment?

c. How much is the last payment on December 24th?

4) A "219-day promissory note" issued at 12% p.a. matured on February 19, 2014 for $92,406.40. Determine the: (3 marks)

1. The original face value of the promissory note
2. The interest included in the maturity.
3. The original issue date of the promissory note

5)A Guaranteed Investment Certificate (GIC) of $50,000 matured for $54,500 at a rate of 15% p.a. If the issue date was May 30, 2021, what was the maturity date? (3 marks)

a. How much interest (in $) did the GIC earn?

b. How many days was the GIC invested for?

c. What was the maturity date of the GIC?

6) You borrowed $20,000 from the Estonian Airline Credit Union at 3% p.a. calculated on the monthly-unpaid balance. You agreed to repay the loan in blended payments of $6,000 per month and one final payment in 4 months. The blended payments would include interest and principal repaid in the payment. Using the following table, complete a repayment schedule for the loan: (6 marks)

Payment Number	Balance before payment	Amount paid	Interest paid. (Monthly rate of interest) ________	Principal repaid	Balance after payment
0					$20,000
1		$6,000
2		$6,000
3		$6,000
4		?_________ ?

(7)Debt payments of $9,000 due 36 months ago from today, $6,000 due today and $4,000 due in 2 years from today, are to be replaced by one single equivalent value payment in 9 months from today. If the cost of money is 15% p.a. and the focal point is in 9 months from today, how large is that unknown payment? (6)

a) What is the value of the $9,000 at the focal point?

b) What is the value of the $6,000 at the focal point?

c) What is the value of the $4,000 at the focal point?

d) What is the size of the large payment at the focal point that replaces all three numbers?

8)An investor bought a $500,000 face Government of Ontario Treasury Bill 350 days before maturity at an interest rate of 3.9% p.a. She sold the T-bill 73 days later at a rate of 3.35% p.a. Determine: (6 marks total)

a. The amount she paid for the T-bill.

b. The amount she sold the T-bill for

c. The rate of return (R) she realized on her investment over the 73 days.