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.

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$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