Simple Interest Because simple interest is used on short term notes, the time period is often given in days rather than months or years We convert this to years by dividing by 360, assuming a 360 day year called a banker's year 1 Use a banker's year described above to answer this question T bills (Treasury bills) are one of the instruments the U S Treasury Department uses to finance public debt If you buy a 290 day T bill with a maturity value of $20,750 for $20,401 5, what annual simple interest rate will you earn Express your answer as a percentage Round to the nearest thousandths of a percent (3 decimal places) 2 Use a banker's year described above to answer this question To complete the sale of a house, the you accept a 220 day note for $6,000 at 7 simple interest (Both interest and principal are repaid at the end of the 220 days ) Wishing to use the money sooner for the purchase of another house, the you sell the note to a third party for $6,154 after 90 days What annual simple interest rate will the third party receive for the investment Express your answer as a percentage Round to the nearest thousandths of a percent (3 decimal places) Buying a Car You are purchasing a new car for $27,600 The dealership offers you three options 0 financing 0 down and 0 financing for 48 months Rebate 0 down If you choose the rebate, you will need to secure a loan for the balance at your local bank Down payment Make a down payment of 5 or more and get financing at 1 5 compounded monthly for 48 months Use this information to answer questions below 1 Use the Buying a Car information above to answer this question What is your monthly payment if you choose 0 financing for 48 months $ Round to the nearest dollar Use the Buying a Car information above to answer this question The rebate offer is $4600, and you can obtain a car loan at your local bank for the balance at 3 08 compounded monthly for 48 months If you choose the rebate, what is your monthly payment $ Round to the nearest dollar Use the Buying a Car information above to answer this question You want to make monthly payments of $479, but you don't want a car loan over your head for more than 48 months, so you decide to go with the down payment option How much of a down payment do you need to make $ Round to the nearest dollar Use the Buying a Car information above to answer this question Suppose you make a down payment of 17 of $27,600 and finance the rest at 1 5 compounded monthly for 48 months How much interest do you pay over the life of the loan $ Round to the nearest dollar

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Question: Simple Interest Because simple interest is used on short-term notes, the time period is often given in days rather than months or years. We convert

Simple Interest

Because simple interest is used on short-term notes, the time period is often given in days rather than months or years. We convert this to years by dividing by 360, assuming a 360 day year called a banker's year.

#1 Use a banker's year described above to answer this question.

T-bills (Treasury bills) are one of the instruments the U.S. Treasury Department uses to finance public debt. If you buy a 290-day T-bill with a maturity value of $20,750 for $20,401.5, what annual simple interest rate will you earn? Express your answer as a percentage.

%. Round to the nearest thousandths of a percent (3 decimal places).

#2 Use a banker's year described above to answer this question.

To complete the sale of a house, the you accept a 220-day note for $6,000 at 7% simple interest. (Both interest and principal are repaid at the end of the 220 days.) Wishing to use the money sooner for the purchase of another house, the you sell the note to a third party for $6,154 after 90 days. What annual simple interest rate will the third party receive for the investment? Express your answer as a percentage.

%. Round to the nearest thousandths of a percent (3 decimal places).

Buying a Car

You are purchasing a new car for $27,600. The dealership offers you three options:

0% financing: 0 down and 0% financing for 48 months.
Rebate: 0 down. If you choose the rebate, you will need to secure a loan for the balance at your local bank.
Down payment: Make a down payment of 5% or more and get financing at 1.5% compounded monthly for 48 months.

Use this information to answer questions below.

#1 Use the Buying a Car information above to answer this question.

What is your monthly payment if you choose 0% financing for 48 months?

$ . Round to the nearest dollar.

Use the Buying a Car information above to answer this question.

The rebate offer is $4600, and you can obtain a car loan at your local bank for the balance at 3.08% compounded monthly for 48 months. If you choose the rebate, what is your monthly payment?

$ . Round to the nearest dollar.

Use the Buying a Car information above to answer this question.

You want to make monthly payments of $479, but you don't want a car loan over your head for more than 48 months, so you decide to go with the down payment option. How much of a down payment do you need to make?

$ . Round to the nearest dollar. Use the Buying a Car information above to answer this question.

Suppose you make a down payment of 17% of $27,600 and finance the rest at 1.5% compounded monthly for 48 months. How much interest do you pay over the life of the loan?

$ . Round to the nearest dollar.

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