Chapter 11: Simple Interest And Simple Discounts

Improved Essays
Unit 3: Instructor Graded Assignment

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
…show more content…
$30,000 + $300 = $30,300
$30,300 – $10,000 = $20,300

New principal after payment and interest in $20,300

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?
The total loan amount with interest was $30,250.75. By paying the $10000 45 days in advance I was able to save $49.25. If I did not pay any in advance I would of paid $30,300 total.

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.
A simple interest note requires the borrower to pay back the maturity value (MV) plus the interest at a pre-determined time. The interest is calculated monthly based off the principal amount. Whereas, a simple discount note’s interest is deducted in advance and its face value will be equal to its maturity

Related Documents

  • Improved Essays

    The first option is the PMA package. In this package it offers a competitive rate, discount, a meaningful benefit. The monthly fee is $30 and a minimum to open the account is $50. To avoid monthly fees is to have $25,000 or more in qualifying linked FDIC-insured accounts. It can also be avoided by having $50,000 or more in qualifying linked bank, credit balances, and a brokerage.…

    • 1074 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    Direct Cash Flow Method

    • 1835 Words
    • 7 Pages

    Selling $10,000 of treasury stock will add $10,000 and buying $10,000 of treasury stock will subtract $10,000 from financing activities. Receiving $25,000 for the issuance of a note or a bond will add $25,000 to financing activities. Paying $10,000 of a note or a bond payable will subtract $10,000 and paying $2,000 for dividends will subtract $2,000 from financing activities. Totaling all of the accounts together, we will reveal the net cash for financing activities. To determine the cash balance at the end of the year, the accountant will total the operating, investing, and financing activities and add that amount to the prior year’s net cash to determine the end of year net cash.…

    • 1835 Words
    • 7 Pages
    Improved Essays
  • Improved Essays

    If the same stock required at 5% rate of return it would be valued at 400. A lower required rate of return means an investor is willing to pay a higher price for a share and the higher their required rate of return means a shareholder is willing to pay less for a share (Cleary & Jones 2013). Some stocks display steady growth and this must be taken into account as part of their valuation (Investopedia 2017). If a stock is expected to grow at a steady rate the value is equal to the dividend at the end of the year divided by the required rate of return minus the growth rate (Investopedia 2017). A stock which pays a 20 $ dividend when the required rate of return is 10% and is expected to grow at a constant rate of 5% would be valued at 420$.…

    • 984 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    When returns are calculated they are always done as an annual rate and represented as a percentage of the original investment (Siegel & Yacht, 2009). Let me break this down into simple math. You will first subtract your initial investment from the end of year value. This will give you how much you have earned over the course of a year. The amount that you earned is then divided by the initial investment, which most likely will give you a decimal.…

    • 838 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Therefore, output reduces to 15 f) How would the $1,000 per day tax affect its profit per day? P=TR-TC P= (15 x 350) - (100x15) = 5250-1500 = $3750 Reduction in profit is $(4,000-3750) = $250 g) Now suppose a tax of $100 per unit is imposed. How will this affect the firm’s price? i) Tax of $100 reduces profit to $(4000-100) =$3900 ii) If quantity 20 produces profit of $4000, then $3900 is produced by (3900x20)/4000 = 19.5 h. How would a $100 per unit tax affect the firm’s profit maximizing output per day? Tax of 100 per unit on 200 reduces profit to $(4000-2000)=2000 If quqntity of 20 producers profit of 4000$ then $2000is produced by (2000*20)/4000=10 There for P= 500-(10*10)…

    • 719 Words
    • 3 Pages
    Improved Essays
  • Decent Essays

    The due date is expressed in number of days (n). • Interest rate (i): fixed. Interests are deducted from the issuance’s nominal value • Basis for interest calculation: by agreement, the basis of calculation for T-Bills is Exact/360. • Interests: interest is payable in advance on value date, calculated on the nominal value (NV) of bills (discounted at the yield rate requested by the investor). • Net amount (NM): the net amount received by the issuer corresponds to the nominal value minus interest paid by the issuer.…

    • 909 Words
    • 4 Pages
    Decent Essays
  • Improved Essays

    The model involves calculating the present value of expected future dividends from a company. The figure is calculated by dividing the current dividend value by the discount rate minus the expected growth rate of dividends. If the present value of the future dividends is greater than the current market value of the stock then the company is undervalued (Investopedia, 2014). The discount rate in this scenario is the rate of return expected by the investor. For Foot Locker, with a dividend value of €1.10, using an average dividend growth rate over the last 5 years of 8.5% and a discount rate of 12% we can calculate that the present value of future dividends is €31.43 which is less than the current stock value of 66.65.…

    • 762 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    To compensate investors for the reinvestment risk and unknown final term of investment, callable bonds generally offer higher yields. Investors in callable bonds must consider two yields — the yield-to-call (YTC) and the yield-to-maturity (YTM) — when analyzing the return scenarios of callable bonds. A call schedule is determined at the time of issuance. An example An investor buy a bond with a face value of $1,000 and a coupon rate of 5%, so the annual interest payments are $50. The bond matures in 10 years, but the issuer can call the bond for face value ($1,000) in two years if they choose.…

    • 966 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Orion Corporation Case

    • 2651 Words
    • 11 Pages

    What is the net income for the month under absorption costing? A) ($17,000) B) $16,600 C) $6,000 D) $10,600 17. Orion Corporation is preparing a cash budget for the six months beginning January 1. Shown below are the company's expected collection pattern and the budgeted sales for the period. Expected collection pattern: 65% collected in the month of sale 20% collected in the month after sale 10% collected in the second month after sale 4% collected in the third month after sale 1% uncollectible Budgeted sales: January $160,000 February 185,000 March 190,000 April 170,000 May 200,000 June 180,000 The estimated total cash collections during April from sales and accounts receivables would be: A) $155,900.…

    • 2651 Words
    • 11 Pages
    Improved Essays
  • Improved Essays

    Municipal bond of equal risk currently yields 6%, At what tax rate would an investor be indifferent between these two bonds? Thanks in advance .a- 9%(1 ' 0.36) = 5.76% or 5.8% b- Corps Bond Yield=(Municipal Yield)/(1- Taxation rate)get an answer of .25 or 25% Complete Chapter 2 problem, 2-8, p. 79 The Wendt Corporation had $10.5 million of taxable income.a. What is the company¶s federal income tax bill for the year?b. Assume the firm receives an additional $1 million of interest income from…

    • 1583 Words
    • 7 Pages
    Improved Essays