CHALLENGE PROBLEMS

$10-36.$ Debbie McAdams paid $8\%$ interest on a $$12,500$ loan balance. Jan Burke paid $$5,000$ interest on a $$62,500$

loan. Based on $1$ year: $($a$)$ What was the amount of interest paid by Debbie? $($b$)$ What was the interest rate

paid by Jan? $($c$)$ Debbie and Jan are both in the $28\%$ tax bracket. Since the interest is deductible, how much

would Debbie and Jan each save in taxes? LU $10-2($I$)$

$10-37.$ Janet Foster bought a computer and printer at Computerland. The printer had a $$600$ list price with a $$100$

trade discount and $\frac{2}{10},\frac{n}{30}$ terms. The computer had a $$1,600$ list price with a $25\%$ trade discount but no

cash discount. On the computer, Computerland offered Janet the choice of $(1)$ paying $$50$ per month for

$17$ months with the $18$th payment paying the remainder of the balance or $(2)$ paying $8\%$ interest for

$18$ months in equal payments. LU $10-1(2)$

a$.$ Assume Janet could borrow the money for the printer at $8\%$ to take advantage of the cash discount. How

much would Janet save? $($Assume $360$ days.$)$

b$.$ On the computer, what is the difference in the final payment between choices $1$ and $2?10-30.$ Shawn Bixby borrowed $$17,000$ on a $120-$day, $12\%$ note. After $65$ days, Shawn paid $$2,000$ on the note. On

day $89,$ Shawn paid an additional $$4,000.$ What is the final balance due? Determine total interest and ending

balance due by the U$.$S$.$ Rule. Use ordinary interest. LU $10-3($I$)$

$10-31.$ Carol Miller went to Europe and forgot to pay her $$740$ mortgage payment on her New Hampshire ski house.

For her $59$ days overdue on her payment, the bank charged her a penalty of $$15.$ What was the rate of interest

charged by the bank? Round to the nearest hundredth percent. $($Assume $360$ days.$)LU10-2(1)$

$10-32.$ Evander Holyfield $($the champion boxer who had part of his ear bitten off by Mike Tyson$)$ made $$250$ million

during his boxing career but declared bankruptcy because of poor financial choices. His July interest at $15\%$

was $$155.$ What was Evander's principal at the beginning of July $($assume $360$ days$)?$ LU $10-2(1)$

$10-33.$ Kurt Busch won the $59$ th Daytona $500$ in February $2017.$ If he paid back a $$6,800$ loan with $$20$ interest at

$7\mathrm{.}5\%,$ what was the time of the loan $($assume $360$ days$)?LU10-2(I)$

$10-34.$ Molly Ellen, bookkeeper for Keystone Company, forgot to send in the payroll taxes due on April $15.$ She sent

the payment November $8.$ The IRS sent her a penalty charge of $8\%$ simple interest on the unpaid taxes of

$$4,100.$ Calculate the penalty. $($Remember that the government uses exact interest.$)LU10-1(2)$

$10-35.$ Oakwood Plowing Company purchased two new plows for the upcoming winter. In $200$ days, Oakwood must

make a single payment of $$23,200$ to pay for the plows. As of today, Oakwood has $$22,500.$ If Oakwood

puts the money in a bank today, what rate of interest will it need to pay off the plows in $200$ days? $($Assume

$360$ days.$)$