CH006.

qxd 11/12/10 3:13 AM Page 299

6.1 Interest 299

SOLUTION The maturity value, the amount to be repaid to the bank by the government,
is L = $500,000. The rate of interest is r = 0.25% = 0.0025. The time is
1
t = 6 months = year. The proceeds R to the government are
2

R = L(1 - rt) = $500,000c1 - 0.0025a b d

1
2
= 500,000(0.99875)
= 499,375
The bank should bid $499,375 if it wants to earn 0.0025%. ■

NOW WORK PROBLEM 67.

EXERCISE 6.1 Answers Begin on Page AN–32.

Concepts and Vocabulary

1. If a principal P is borrowed at a simple interest rate r (expressed
as a decimal) for a period of t years, the interest charge I
is __________.
2. If a lender deducts the interest from the amount of the loan
at the time the loan is made, the loan is said to be
__________.
3. True or False For a simple interest loan with interest rate r
(expressed as a decimal), the amount A due at the end of t years
on a principal P borrowed is P = A(1 + rt).
4. True or False For a discounted loan at a rate of interest r
(expressed as a decimal), the discount is Lrt, where L is the
amount of the loan and t is the time in years.

Skill Building
In Problems 5–12, write each decimal as a percent.
5. 0.60 6. 0.40 7. 1.1 8. 1.2 9. 0.06 10. 0.07 11. 0.0025 12. 0.0015

In Problems 13–20, write each percent as a decimal.

13. 25% 14. 15% 15. 100% 16. 300% 17. 6.5% 18. 4.3% 19. 0.05% 20. 0.012%

In Problems 21–34, calculate the indicated quantity.

21. 15% of 1000
24. 10% of 50
27. What percent of 80 is 4?
30. What percent of 25 is 45?
33. 50 is 15% of what number?
22. 20% of 500 23. 18% of 100
25. 210% of 50 26. 135% of 1000
28. What percent of 60 is 5? 29. What percent of 5 is 8?
31. 20 is 8% of what number? 32. 25 is 12% of what number?
34. 40 is 18% of what number?

In Problems 35–40, find the interest due on each loan.

35. $1000 is borrowed for 3 months at 4% simple interest. 36. $100 is borrowed for 6 months at 8% simple interest.
37. $500 is borrowed for 9 months at 12% simple interest. 38. $800 is borrowed for 8 months at 5% simple interest.
39. $1000 is borrowed for 18 months at 10% simple interest. 40. $100 is borrowed for 24 months at 12% simple interest.

In Problems 41–46, find the simple interest rate for each loan.
41. $1000 is borrowed; the amount owed after 6 months is $1050. 42. $500 is borrowed; the amount owed after 8 months is $600.
43. $300 is borrowed; the amount owed after 12 months is $400. 44. $600 is borrowed; the amount owed after 9 months is $660.
45. $900 is borrowed; the amount owed after 10 months is $1000. 46. $800 is borrowed; the amount owed after 3 months is $900.