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CHAPTER 6
Student: ___________________________________________________________________________
1. Calculate the missing value:

6. How much interest will be earned on $5,000 in 5 months if the annual simple interest rate is
1.5%?
7. An invoice states that interest will be charged on overdue accounts at the rate of 1½% per month.
What will be the interest charges on a $3,760 billing that is 3 months overdue?
8. The interest owed on a loan after 5 months was $292.50. If the simple interest rate charged on
the loan was 0.9% per month, what was the amount borrowed?
9. How much must be placed in a 5-month term deposit earning 4.3%, simple interest, in order to
earn $500 interest?
10. A five-month term deposit of $10,000 at the Scotiabank earned $75 in interest. What annual rate
of simple interest did the deposit earn?
11. On June 26, 2013, $1000 was borrowed at an interest rate of 10.75%. On what date was the loan
repaid if the amount of accrued interest was $63.91?
12. On June 26 Laura put $2,750 into a term deposit until September 3, when she needs the money
for tuition, books, and other expenses to return to college. For term deposits in the 60-89-day
range, her credit union pays an interest rate of 4.25%. How much interest will she earn on the
term deposit?
13. Raimo borrowed $750 from Chris on October 30 and agreed to repay the debt with simple
interest at the rate of 4.3% on May 10. How much interest was owed on May 10? Assume that
February has 28 days.
14. Joyce had $2,149 in her daily interest savings account for the entire month of June. Her account
was credited with interest of $2.65 on June 30 (for the exact number of days in June). What
annual rate of simple interest did her balance earn?
15. Maia's chequing account was $329 overdrawn beginning on September 24. On October 9 she
made a deposit that restored a credit balance. If she was charged overdraft interest of $2.50,
what annual rate of simple interest was charged?
16. What will be the maturity value after seven months of $2950 earning interest at the rate of 4.5%?
17. $12,800 was invested in a 237 day term deposit earning 3.75%. What was its maturity value?
18. After a term of 23 days, a loan at 10.5% has a maturity value of $785.16. What was the principal
value of the loan?
19. The maturity value of an investment earning 7.7% per annum for a 360 day term was $2291.01.
What amount was originally invested?
20. A $7760 investment earning 6.25% matured at $8083.33. What was the term (in months) of the
investment?
21. In addition to a $2,163 refund of his income tax overpayment, the Canada Revenue Agency
(CRA) paid Raisa $13.36 of interest on the overpayment. If the simple interest rate paid by
Revenue Canada was 5.5%, how many days' interest was paid?
22. Marta borrowed $1,750 from Jasper on November 15, 2014, and agreed to repay the debt with
simple interest at the rate of 7.4% on June 3, 2015. How much interest was owed on June 3?
23. Petra has forgotten the rate of simple interest she earned on a 120-day term deposit at
Scotiabank. At the end of the 120 days, she received interest of $327.95 on her $21,000 deposit.
What rate of simple interest was her deposit earning?
24. Indira paid interest charges of $169.05 on a $4830 invoice that was two months overdue. What
monthly rate of simple interest was she charged?
25. Megan was charged $124.83 interest on her bank loan for the period September 18 to October
18. If the rate of interest on her loan was 8.25%, what was the outstanding principal balance on
the loan during the period?
26. Morgan loaned $3,100 to Rolf at a simple interest rate of 0.65% per month. What was the term of
loan if the total interest came to $221.65?
27. What was the principal amount of a loan at 9.5% if $67.78 of interest accrued from October 28,
2013 to April 14, 2014?
28. On what date was a $1000 loan granted if the interest accrued as of November 16, 2013 was
$50.05? The interest rate on the loan was 7.25%.
29. Asher cashed in a one-year term deposit after only five months had elapsed. In order to do so, he
accepted an interest rate penalty—a reduction from the scheduled 5.5% rate of simple interest. If
he was paid $145.83 interest on the $10,000 term deposit, what reduction was made in the per-
annum rate of simple interest?
30. The balance after 11 months, including, on a loan at 9.9% is $15,379.58. What are the principal
and interest components of the balance?
31. $7348.25 was the amount required to pay off a loan after 14 months. If the loan was at 8.25% per
annum simple interest, how much of the total was interest?
32. What was the interest rate on a $1750 loan if the amount required to pay off the loan after five
months was $1,828.02?
33. A $2875.40 investment grew to $3000 after eight months. What annual rate of simple interest did
it earn?
34. Marliss made a $780.82 purchase on her Visa card. Including 45 days' interest, the amount billed
on her credit card was $798.63. What annual interest rate does her card charge?
35. The bookkeeper for Durham's Garage is trying to allocate to principal and interest a payment that
was made to settle a loan. The cheque stub has the note "$3,701.56 for principal and 7 months'
interest at 12.5%." What are the principal and interest components of the payment?
36. Umberto borrowed $7,500 from Delores on November 7, 2013. When Umberto repaid the loan,
Delores charged him $190.02 interest. If the rate of simple interest on the loan was 6.75%, on
what date did Umberto repay the loan?
37. Jacques received the proceeds from an inheritance on March 15. He wants to set aside, in a term
deposit on March 16, an amount sufficient to provide a $45,000 down payment for the purchase
of a home on November 1. If the current interest rate on 181-day to 270-day deposits is 3.75%,
what amount should he place in the term deposit?
38. If $3,702.40 earned $212.45 interest from September 17, 2014 to March 11, 2015, what rate of
interest was earned?
39. A loan of $3,300 at 9.25% simple interest was made on March 27. On what date was it repaid if
the interest cost was $137.99?
40. What amount invested at 4.5% on November 19, 2014 had a maturity value of $10,000 on March
3, 2015?
41. Sumer put $10,000 in a 3-month term deposit at TD Canada Trust, earning a simple interest rate
of 3.9% pa. After the 3 months, she invested the entire amount of the principal and interest from
the first term deposit in a new 3-month term deposit earning the same rate of interest. How much
interest did she earn on each term deposit? Why are the two interest amounts not equal?
42. Sergon has $5,000 to invest for six months. The rates offered on three-month and six-month term
deposits at his bank are 3.5%3.8%, respectively. He is trying to choose between the six-month
term deposit and two consecutive three-month term deposits. What would the simple interest rate
on three-month term deposits have to be, three months from now, for Sergon to end up in the
same financial position with either alternative? Assume that he would place both the principal and
interest from the first three-month term deposit in the second three-month term deposit.
43. Evelyn put $15,000 into a 90-day term deposit at Laurentian Bank paying a simple interest rate of
3.2%. When the term deposit matured, she invested the entire amount of the principal and
interest from the first term deposit into a new 90-day term deposit earning the same rate of
interest. What total amount of interest did she earn on both term deposits?
44. Mario borrowed $6,000 on March 1 at a variable rate of interest. The interest rate began at 7.5%,
increased to 8% effective April 17, and then fell by 0.25% effective June 30. How much interest
will be owed on the August 1 repayment date?
45. How much will be required on February 1 to pay off a $3,000 loan advanced on the previous
September 30 if the variable interest rate began the interval at 10.7%, rose to 11.2% effective
November 2, and then dropped back to 11% effective January 1?
46. The total accrued interest owed as of August 31 on a loan advanced the preceding June 3 was
$169.66. If the variable interest rate started at 8.75%, rose to 9% effective July 1, and increased
another 0.5% effective July 31, what was the principal amount of the loan?
47. The annual $3,600 membership fee at the Oak Meadows Golf Club is due at the beginning of the
year. Instead of a single "lump" payment, a member can pay $1,600 at the start of the year and
defer the $2,000 balance for five months by paying a $75 surcharge at the time of the second
payment. Effectively, what annual rate of simple interest is Oak Meadows charging on the $2,000
deferred payment?
48. Today is March 25th. Snow tires that you need are available today at a sale price of $89.95 each.
If you wait until October 1 to buy the tires, you will pay the full price of $107.50 each. If you buy
the tires today, you will need to borrow money at 12% per annum simple interest. Should you buy
the tires today or wait until October 1. Explain.
49. A&B Appliances sells a washer-dryer combination for $1535 cash. C&D Appliances offers the
same combination for $1,595 with no payments and no interest for 6 months. Therefore, you can
pay $1,535 now or invest the $1535 for 6 months and then pay $1,595. What value would the
annual rate of return have to exceed for the second alternative to be your advantage?
50. What is meant by "equivalent payments"?
51. What amount of money paid today is equivalent to $560 paid five months from now if money can
earn 1.75% per annum?
52. What amount, seven months from now, is equivalent to $1215 today if money can be invested to
earn 4.5%?
53. What payment, 174 days from now, is equivalent to $5230 paid today? Assume that money is
worth 5.25% per annum.
54. Patrick is scheduled to receive $1480 in 60 days from now. How much should he accept today as
an equivalent payment if his money can earn 6.75%?
55. What amount received on January 13 is equivalent to $1,000 received on the preceding August
12 if money can earn 5.5%?
56. Rasheed wishes to postpone for 90 days the payment of $450 that he owes to Roxanne. If money
now earns 4.75%, what amount can he reasonably expect to pay at the later date?
57. Avril owes Value Furniture $1,600, which is scheduled to be paid on August 15. Avril has surplus
funds on June 15 and will settle the debt early if Value Furniture will make an adjustment
reflecting the current short-term interest rate of 3.25%. What amount should be acceptable to
both parties?
58. What amount on January 23 is equivalent to $1,000 on the preceding August 18 if money can
earn 6.5%?
59. What annual rate of return would money have to earn for $1975.00 to be equivalent to $1936.53
paid 100 days earlier?
60. At what rate can money be invested if $2370.00 is equivalent to $2508.79 paid 190 days later?
61. A late payment of $850.26 was considered equivalent to the originally scheduled payment of
$830.00, allowing for interest at 9.9%. How many days late was the payment?
62. Nicholas can purchase the same furniture from Store A for $2,495 cash or from Store B for
$2,560 with nothing down and no payments or interest for 8 months. Which option should
Nicholas choose if he can pay for the furniture by cashing in Canada Savings Bonds currently
earning 3.9% per annum?
63. During its 50-50 Sale, Marpole Furniture will sell its merchandise for 50% down, with the balance
payable in six months. No interest is charged for the first six months. What 100% cash price
should Marpole accept on a $1,845 chesterfield and chair set if Marpole can earn a rate of return
of 2.75% on its funds?
64. Sheldrick Contracting owes Western Equipment $60,000 payable on June 14. In late April,
Sheldrick has surplus cash and wants to settle its debt. If Western can earn 3.6% on its money,
how much should Western accept on April 29?
65. Peter and Reesa can book their Horizon Holiday package at the early-booking price of $3,850, or
wait four months and pay the full price of $3,995.
a) Which option should they select if money can earn a 5.25% rate of return? In current dollars,
how much do they save by selecting the preferred option?
b) Which option should they select if money can earn a 9.75% rate of return? In current dollars,
how much do they save by selecting the preferred option?
c) At what interest rate would they be indifferent between the two prices?
66. Mr. and Mrs. Chan have listed for sale a residential building lot they own in a nearby town. They
are considering two offers. The offer from the Smiths is for $145,000 consisting of $45,000 down
and the balance to be paid in six months. The offer from the Kims is for $149,000 consisting of
$29,000 down and $120,000 payable in one year. The Chans can earn an interest rate of 4.5%
on low-risk short-term investments.
a) What is the current economic value to the Chans of each offer?

b) Other things being equal, which offer should the Chans accept? How much more is the better
offer worth (in terms of current economic value)?
67. Westwood Homes is beginning work on its future College Park sub-division. Westwood is now
pre-selling homes that will be ready for occupancy in nine months. Westwood is offering $5,000
off the $295,000 selling price to anyone making an immediate $130,000 down payment (with the
balance due in nine months.) The alternative is a $5,000 deposit with the $290,000 balance due
in nine months. Mr. and Mrs. Symbaluk are trying to decide which option to choose. They
currently earn 4.8% on low-risk short-term investments.
a) What is the current economic cost of buying on the $130,000-down $5,000-off option?
b) What is the current economic cost of buying on the $5,000-deposit full-price option?
c) Which alternative should the Symbaluks choose? In current dollars, what is the economic
advantage of the preferred alternative?
68. What is meant by the "time value of money"?
69. We frequently hear a news item that goes something like: "Joe Superstar signed a 5-year deal
worth $25 million. Under the contract he will be paid $3 million, $4 million, $5 million, $6 million
and $7 million in successive years." In what respect is the statement incorrect? How should the
value of the contract be calculated?
70. How do you determine the economic value on a particular date of a series of payments?
71. How can you determine whether two payment streams are equivalent to each other?
72. Calculate the combined equivalent value today of $500 due today and $300 due in three months.
Assume that money can earn 95%.
73. Calculate the combined equivalent value in five months from now of a payment stream consisting
of $1000 payable today and $1500 payable in five months? Assume money can earn 5.5%.
74. Payments of $850 and $1,140 were scheduled to be paid today and nine months from now,
respectively. What total payment today would place the payee in the same financial position as
the scheduled payments? Money can earn 8.25%.
75. Payments of $900 and $1000 are due in 30 days and 210 days respectively. If money can be
invested at 7.75% what single payment 90 days from now is equivalent to that payment stream?
76. A payment stream consists of three payments:$1000 today, $1500 in 70 days, and $2000 in 210
days. What single payment, 60 days from now, is economically equivalent to the payment stream
if money can be invested at a rate of 8.5%?
77. Two payments of $1,300 and $1,800 were scheduled to be paid five months ago and three
months from now, respectively. The $1,300 payment has not yet been made. What single
payment at a focal date one month from now would be equivalent to the two scheduled payments
if money can earn 4.5 %?
78. If money earns 9.5%, calculate and compare the economic value today of the following payment
streams:
a) Payments of $900 and $1,400 due 150 and 80 days ago, respectively.
b) Payments of $800, $600, and $1,000 due 30, 75, and 125 days from now, respectively.
79. What is the economic value today of each of the following payment streams if money can earn
7.5%? (Note that the two streams have the same total nominal value.)
a) $1,000, $3,000, and $2,000 due in one, three, and five months, respectively.
b) Two $3,000 payments due two and four months from now.
80. A $3000 loan at 5% was made on March 1. Two payments of $1000 each were made on May 1
and June 1. What payment on July 1 will pay off the loan?
81. A $1000 loan at 3% was repaid by two equal payments made 30 days and 60 days after the date
of the loan. Determine the amount of each payment.
82. Two equal payments, 50 days and 150 days after the date of the loan, paid off a $3000 loan at
8.25%. What was the amount of each payment?
83. Payments of $1,000 and $7,500 were originally scheduled to be paid five months ago and four
months from now, respectively. The first payment was not made. What payment two months from
now is equivalent to the scheduled payment if money can earn 6.25%?
84. If money earns 7.5%, calculate and compare the economic value today of the following payment
streams:
a) Payments of $1,800 and $2,800 made 150 and 90 days ago, respectively.
b) Payments of $1,600, $1,200, and $2,000 due 30, 75, and 120 days from now, respectively.
85. Eight months ago, Louise agreed to pay Thelma $750 and $950 six and twelve months,
respectively, from the date of the agreement. With each payment, Louise agreed to pay interest
on the respective principal at the rate of 9.5% from the date of the agreement. Louise failed to
make the first payment and now wishes to settle her obligations with a single payment four
months from now. What payment should Thelma be willing to accept if money can earn 7.75%?
86. Payments of $2,600, due 50 days ago, and $3,100, due in 40 days, are to be replaced by $3,000
today and another payment in 30 days. What must the second payment be if the payee is to end
up in an equivalent financial position? Money now earns 8.25%. Use 30 days from now as the
focal date.
87. Three payments of $2,000 (originally due six months ago, today, and six months from now) have
been renegotiated to two payments: $3,000 one month from now and a second payment due in
four months. What must the second payment be for the replacement payments to be equivalent
to the originally scheduled payments? Assume that money can earn an interest rate of 4%.
Choose a focal date four months from now.
88. What should be the amount of each payment if a $2500 loan at 8.75% is to be repaid by three
equal payments due two months, four months, and seven months following the date of the loan?
89. The simple interest rate on a $5,000 loan is 7%. The loan is to be repaid by four equal payments
on dates 100, 150, 200, and 250 days from the date on which the loan was advanced. What is
the amount of each payment?
90. Anthony borrowed $7,500 on September 15 and agreed to repay the loan by three equal
payments on the following November 10, December 30, and February 28. Calculate the payment
size if the interest rate on the loan was 8.75%.
91. Mr. & Mrs. Parsons are considering two offers to purchase their summer cottage. Offer A is for
$200,000 consisting of an immediate $40,000 down payment with the $160,000 balance payable
one year later. Offer B is for $196,500 made up of a $30,000 down payment and the $166,500
balance payable in six months.
a) If money can earn 4%, what is the current economic value of each offer?
b) Other things being equal, which offer should the Parsons accept? What is the economic
advantage of the preferred offer over the other offer?
c) If money can earn 6%, which offer should the Parsons accept? What is the economic
advantage of the preferred offer?
92. Nine months ago, Muriel agreed to pay Aisha $1,200 and $800 on dates 6 and 12 months,
respectively, from the date of the agreement. With each payment Muriel agreed to pay interest at
the rate of 8.5% from the date of the agreement. Muriel failed to make the first payment and now
wishes to settle her obligations with a single payment four months from now. What payment
should Aisha be willing to accept if money can earn 6.75%?
93. A $9,000 loan is to be repaid in three equal payments occurring 60, 180, and 300 days,
respectively, after the date of the loan. Calculate the size of these payments if the interest rate on
the loan is 7.25%. Use the loan date as the focal date.
94. Thad is planning to buy a rototiller next spring at an expected price of $579. In the current fall
"flyer" from Evergreen Lawn and Garden, the model he wants is advertised at $499.95 in a Fall
Clearance Special.
a) If money can earn 4%, what is the economic value on the preceding September 15 of the $579
that Thad will pay to purchase the rototiller next April 1? (Assume that February has 28 days.)
b) What are his true economic savings if he purchases the rototiller at the sale price of $499.95
on September 15?
c) What interest rate would money have to earn for Thad to be indifferent between buying the
rototiller at $499.95 on September 15 versus buying it for $579 on the subsequent April 1?

98. Calculate the amount of interest owed on the repayment date:

100.Calculate the missing value:

104.What will be the maturity value in 15 months of a $4,500 loan at a simple interest rate of 11.9%?
105.Cecille placed $17,000 in a 270-day term deposit earning 4.25%. How much will the bank pay
Cecille on the maturity date?
106.What amount of interest will be earned on $1,500 invested for 18 months at an interest rate of
4%?
107.How much will have to be deposited to earn $600 interest over two years at an interest rate of
3%?
108.How many days will it take $2,500 to grow to $2,614.47 at an annual rate of 8.75%?
109.An investment earned $156.25 interest in 30 months. What was the simple annual rate of
interest?
110.The interest earned on a $7,500 investment was $1181.25. What was the term in months if the
rate of interest was 3.5%?
111.What will be the maturity value of $3,300 invested at an interest rate of 2.75% in 15 months?
112.Karen borrowed $2,000 at 10¼% on July 13. On what date would the amount owed first exceed
$2,100?
113.Calculate the missing values:

116.On what date did a corporation borrow $350,000 at 7.5% from its bank if the debt was settled by
a payment of $356,041 on February 28?
117.Judith received the proceeds from an inheritance on March 25. She wants to set aside enough on
March 26 so that she will have $20,000 available on October 1 to purchase a car when the new
models are introduced. If the current interest rate on 181- to 270-day term deposits is 3.75%,
what amount should she place in the term deposit?
118.Village Finance Co. advanced three loans to Kamiko—$2,200 on June 23, $1,800 on August 5,
and $1,300 on October 31. Simple interest at 7.25% was charged on all three loans, and all were
repaid on December 31 when some bonds that she owned matured. What total amount was
required to pay off the loans?
119.Bruce borrowed $6,000 from Darryl on November 23. When Bruce repaid the loan, Darryl
charged $203.22 interest. If the rate of simple interest on the loan was 10.75%, on what date did
Bruce repay the loan? Assume that February has 28 days.
120.Sharon's $9,000 term deposit matured on March 16, 2014. Based on a simple interest rate of
3.75%, she received $110.96 in interest. On what date did she originally make the term deposit?
121.The cash balance in Amalia's account with her stockbroker earns interest on the daily balance at
an annual rate of 4%. Accrued interest is credited to her account every six months—on June 30
and December 31. As a result of the purchase and sale of securities from time to time, the
account's balance changed as follows:
Investment date Amount invested Interest rate M

What interest was credited to Amalia's account on June 30? The brokerage firm includes interest
for both January 1 and June 30 in the June 30 payment. Assume that February had 28 days.
122.Dominion Contracting invested surplus funds in term deposits. All were chosen to mature on April
1 when the firm intends to purchase a new grader.
What total amount will be available from the maturing term deposits on April 1 (of a leap year)?
123.Sam borrowed $1,250 on March 15 at an interest rate of 4.5%. Sam repaid the full amount plus
the interest owed on September 1. How much did Sam repay?
124.Larissa earned $8.74 interest on $1,100 invested from January 11 to June 4. What annual rate of
simple interest did she earn?
125.How much interest will an investment of $5,075 earn in two years at an interest rate of 2.25%?
126.Sam earned $650 on an investment deposited at an interest rate of 3.25% for 30 months. How
much was the original investment?
127.Marika deposited $2,100 on May 22. On September 10, she had $2,120.12. What simple interest
rate per year did she earn?
128.What amount would have to be invested at a simple interest rate of 2.85% to grow to $2,529.28
in 150 days?
129.Kristina earned $33.70 at an interest rate of 2.5% from November 29 to April 1. What amount did
she invest? Assume that February has 28 days.
130.Penny invested $4,500 on October 28 at a floating rate of interest that initially stood at 6.3%.
Effective December 2, the rate dropped by ½% and then it declined another ¼% effective
February 27. What total amount of principal plus interest will Penny receive when the investment
matures on March 15? Assume that the new year is a leap year.
131.Marika earned $40.07 interest at 2.5% on $5,000 invested on April 7. On what date did her
investment mature?

135.Determine a) whether the earlier or later payment has the greater economic value at the given
interest rate and b) the interest rate at which the two payments would be equivalent:
137.Two payments of $5,000 are to be received four and eight months from now.
a) What is the combined equivalent value of the two payments today if money can earn 6%?
b) If the rate of interest money can earn is 4%, what is the payments' combined equivalent value
today?
138.Three payments are scheduled as follows: $1,200 is due today, $900 is due in five months, and
$1,500 is due in eight months. The three payments are to be replaced by a single equivalent
payment due ten months from now. What should the payment be if money is worth 5.9%? Use
ten months from now as the focal date.
139.The first two of the following three payments were not made as scheduled. $1,200 was due
seven months ago, $900 was due two months ago, and $1,500 is due in one month. The three
payments are to be replaced by a single equivalent payment due three months from now. What
should the payment be if money is worth 9.9%? Use three months from now as the focal date.
142.What amount paid on September 24 is equivalent to $1,000 paid on the following December 1 if
money can earn 3%?
143.A $5,000 payment is scheduled for 120 days from now. If money can earn 7.25%, calculate the
payment's equivalent value at each of nine different dates: today and every 30 days for the next
240 days.
144.A $3,000 payment is scheduled for 6 months from now. If money is worth 6.75%, calculate the
payment's equivalent values at two-month intervals beginning today and ending one year from
now.
145.Mr. and Mrs. Chan are considering two offers on a building lot that they own in a nearby town.
One is for $49,000, consisting of $10,000 down and the balance to be paid in a lump payment in
eight months. The second is for $50,000, with $10,000 down and the balance to be paid in 1
year. What rate of return must money earn for Mr. and Mrs. Chan to be indifferent between the
two offers?
146.What interest rate must money earn for a payment of $1,389 on August 20 to be equivalent to a
payment of $1,348 on the previous March 29?
147.Under what circumstance is $100 paid today equivalent to $110 paid 1 year from now?
148.How can you determine whether two payments are equivalent to each other?
149.What is meant by the "present value" of a payment that is scheduled for a future date?
150.How can you determine which of three payments has the largest economic value?
151.If the interest rate money can earn is revised upward, will a scheduled payment's present value
be higher or lower? Explain.
152.What payment on August 19 is equivalent to a $1,000 payment on the preceding January 19, if
the rate of interest is 4.5%?
153.A large retail store offers no payments, no interest for six months on all furniture and appliance
purchases exceeding $1,500. If money can earn 3.5%, how much should the store accept as a
payment today on furniture costing $1,850?
154.Sam has won a lottery. He can take $5,000 now or $5,500 in one year. If money can earn 8%,
which option should he choose?
155.A large retail store offers a payment plan of no interest with 50% down and the balance in six
months on a minimum purchase of $500. If money can earn 3.25%, how much of a discount
should a buyer receive on a purchase of $2,000 if paid in full at the time of purchase?
156.If the interest rate money can earn is revised upward, is today's economic value of a stream of
future payments higher or lower? Explain.
157.Calculate the equivalent value of the scheduled payments if money can earn the rate of return
specified in the last column. Assume that any payments due before today have been missed.
158.What single payment, 45 days from now, is economically equivalent to the combination of three
payments of $1750 each: one due 75 days ago, the second due today, and the third due in 75
days from now? Money is worth 9.9% per annum.
159.Two payments of $2,000 each are to be received six and twelve months from now. If money is
worth 10%, what is the total equivalent value of the payments:
a) Today?
b) Six months from today?
c) Explain why the answer in part (b) is larger.
160.Two payments of $3,000 each are due in 50 and 100 days. What is their combined economic
value today if money can earn:
a) 9%?
b) 11%?
c) Explain why the answer in part (b) is smaller.
161.Seth has a loan to repay. His terms are payments of $1,000 in six months and $1,000 in one
year. He wants to settle the debt in three months. If the rate of interest is 6.5%, what single
equivalent payment should Sam make?
162.Ninety days ago Stella signed an agreement with Manon requiring her to make three payments of
$400 plus interest 90, 150, and 210 days, respectively, from the date of the agreement. Each
payment was to include interest on the $400 principal at the rate of 13.5% from the date of the
agreement. Stella now wants Ed to renegotiate the agreement and accept a single payment 30
days from now, instead of the three scheduled payments. What payment should Manon require in
the new agreement if money is worth 8.5%?
163.Which of the following two payment streams has the greater economic value today if money can
earn 3.5%: $500 now, $600 in three months, plus $900 in six months or $700 now, $300 in three
months, plus $1,000 in nine months?
164.The original $3,000 loan was advanced on March 1. The loan is to be repaid by the three
indicated payments. Calculate the unknown payment in each case. Use the loan date as the
focal date.
165.The original $3,000 loan was advanced on March 1. The loan is to be repaid by the three
focal date.
166.A karate club offers two payment plans for a one-year membership. The first is a cash price of
$475. The second is a payment of $250 today, and $250 in six months. If the interest rate
charged by the club is 8%, which option has the greater economic value?
167.A $10,000 loan made on January 1 at 7%, is to be repaid by payments of $3,500 on July 1,
$3,500 on October 1, and a final payment on January 1 of the next year. What is the amount of
the final payment required to pay off the loan in full?
168.Maurice borrowed $6,000 from Heidi on April 23 and agreed to make payments of $2,000 on
June 1 and $2,000 on August 1, and to pay the balance on October 1. If simple interest at the
rate of 10% was charged on the loan, what is the amount of the third payment?
169.A loan of $10,000 is to be repaid by three payments of $2,500 due in two, four, and six months,
and a fourth payment due in eight months. What should be the size of the fourth payment if an
interest rate of 11% is charged on the loan? Use today as the focal date.
170.A loan of $4,000 at 13% is to be repaid by three equal payments due four, six, and eight months
after the date on which the money was advanced. Calculate the amount of each payment.
171.A $6,000 loan at 8% is to be repaid in three equal payments at three months, six months, and
nine months. Determine the size of the equal payments.
172.A $7,500 loan will be paid off by four equal payments to be made 2, 5, 9, and 12 months after the
date of the loan. What is the amount of each payment if the interest rate on the loan is 9.9%?
173.$3,000 loan was advanced on March 1. The loan is to be repaid by the three indicated payments.
Calculate the unknown payment in each case. Use the loan date as the focal date.
174.Kris has borrowed $2,000 and has agreed to repay the loan in two payments in nine and fifteen
months. Each payment is $1,000 of principal and interest at the rate of 7%. Kris wants to settle
the debt in six months. What single equivalent payment should she make if money is now worth
5%?
175.A $5,000 loan made on March 15 at an interest rate of 7.5%, is to be repaid by payments of
$2,000 on June 15, $2,000 on October 15, and a final payment on December 15. What is the
amount of the final payment required to pay off the loan in full?
176.An $8,000 loan at an interest rate of 6.5% is to be repaid in three equal payments at six months,
nine months, and one year later. Determine the size of the equal payments.
177.Calculate the size of the equal payments. Use the loan date as the focal date.
178.How much interest will be earned on $8,000 over a period of four months if the interest rate is
6.5%?
A. $7,830.34
B. $173.33
C. $169.66
D. $130.00
E. $26.00
179.How much must be placed in a two-month term deposit earning 4.8% in order to earn $275
interest?
A. $12,500.00
B. $5,729.17
C. $23,333.33
D. $34,375.00
E. $53,333.33
180.In how many months will $6,000 earn interest of $2,700 at 15%?
A. 3 months
B. 36 months
C. 4 months
D. 60 months
E. 1 month
181.A principal of $2,680 is invested for 2.5 years at a rate of 12%. What amount of interest will be
earned?
A. $321.60
B. $3,001.60
C. $3,484.00
D. $290.33
E. $804.00
182.A deposit of $659 earns $15.10 interest at a rate of 4.5%. For how many days was this money on
deposit?
A. 186
B. 51
C. 183
D. 191
E. 190
183.A $10,000 90-day term deposit earns 4.5% interest. How much will the depositor have at
maturity?
A. $11,825.00
B. $10,110.96
C. $10,112.50
D. $112.50
E. $110.96
184.A principal of $790 grew to $1,000 in 14 months. What annual rate of simple interest was
earned?
A. 1.89%
B. 15.23%
C. 9.67%
D. 18.00%
E. 22.78%
185.What principal will grow to $12,031.25 at 7.5% interest in 15 months?
A. $10,000.00
B. $11,000.00
C. $15,000.00
D. $20,000.00
E. $21,000.00
186.If $450,000 is invested on June 3 at 7.75%, what will be the value of the investment on
December 11?
A. $468,250
B. $466,625
C. $632,497
D. $432,461
E. $484,875
187.A 9-month term deposit, earning interest at 7%, was worth $72,559 when it reached maturity
today. How much had been invested at the beginning of the term?
A. $76,368
B. $68,940
C. $72,552
D. $67,480
E. $70,000
188.Determine the amount of (simple) interest that would be earned over eight months at 26% on an
investment of $43,500.
A. $11,309.99
B. $2,352.48
C. $7,540.00
D. $6,786.00
E. $5,367.03
189.How many days would it take for an investment of $9,000 to grow to $10,000 at 17%?
A. 214
B. 239
C. 126
D. 53
E. 66
190.Calculate the amount of interest that would be earned on an account of $47,500 if it earned 6.4%
for 293 days.
A. $89,072
B. $3,040
C. $2,440
D. $17,442
E. $11,298
191.Calculate the amount of interest that would be earned on an account of $59,500 at 7.2% for 133
days.
A. $4,284
B. $1,561
C. $1,013
D. $2,229
E. $3,771
192.Calculate the amount of interest that would be earned on an account of $216,000 if it earned
5.15% for 27 days.
A. $11,298
B. $11,124
C. $823
D. $1,744
E. $2,110
193.Calculate the amount of interest that would be earned on an account of $344,000 if it earned
4.95% for 37 days.
A. $17,028
B. $11,124
C. $991
D. $1,726
E. $2,110
194.How much interest could you earn over 7 months on an investment of $49,000 at 14.75%?
A. $28,583
B. $422
C. $5,059
D. $508
E. $4216
195.How much interest could you earn, over 5 months on an investment of $94,000 at 17.75%?
A. $39,167
B. $6,952
C. $8,342
D. $993
E. $4,216
196.How much interest could you earn over 2 months on an investment of $82,500 at 23.5%?
A. $3,231
B. $9,694
C. $6,942
D. $714
E. $4,216
197.After how many days will a loan of $888 at 15% amount to $1554 (including accrued interest)?
A. 1825 days
B. 365 days
C. 100 days
D. 2,025 days
E. 525 days
198.Calculate the maturity value of an investment of $22,500 after 9 months at 13.45%.
A. $20,438.29
B. $4,736.25
C. $2,269.69
D. $27,236.25
E. $24,769.69
199.Calculate the maturity value of a loan of $6,875 after 239 days at 18.3%.
A. $7,698.81
B. $7,991.81
C. $6,051.19
D. $8,238.13
E. $8,769.81
200.Robert placed $7,000 in a 10-month term deposit paying 6.25%. How much will the term deposit
be worth when it matures?
A. $3,645.83
B. $7,991.81
C. $7,364.58
D. $6,653.46
E. $7,769.89
201.After 7 months how much interest would I have to pay on a loan of $300 if the rate of interest was
32%?
A. $96.00
B. $47.50
C. $36.67
D. $56.00
E. $69.74
202.How much money would one have to invest today at 18.75% in order to have a total of $20,000
in 9 months?
A. $16,250
B. $23,750
C. $22,813
D. $17,534
E. $19,122
203.How long will it take to earn $542.40 interest on an investment of $6,400 at 11.3%?
A. 7.5 months
B. 8.0 months
C. 8.5 months
D. 9.0 months
E. 9.5 months
204.What simple annual interest rate would you need to earn $2,000 interest in 147 days on an
investment of $49,000?
A. 19.33%
B. 40.82%
C. 10.13%
D. 21.44%
E. 7.85%
205.After 4 months how much interest would I have to pay on a loan of $500 if the rate of interest was
22%?
A. $11.25
B. $27.50
C. $36.67
D. $110.00
E. $39.74
206.If $59,200 grows to $60,000 in 41 days what simple annual interest rate was earned?
A. 12.03%
B. 11.87%
C. 13.51%
D. 17.48%
E. 10.16%
207.Calculate the amount of money that would have to be invested at 8.5% to earn monthly interest
of $3,000?
A. $255,000
B. $352,941
C. $355,491
D. $423,529
E. $521.449
208.How much interest would one earn over 200 days on an investment of $95,000 at an interest rate
of 14%?
A. $1,023
B. $5,889
C. $7,021
D. $7,288
E. $13,300
209.How long will it take for an investment of $9,000 at 3.75% to earn interest of $250?
A. 74 days
B. 163 days
C. 218 days
D. 270 days
E. 741 days
210.On March 14 Lisa invested in a 200-day term deposit. On what date will it mature?
A. January 16
B. March 23
C. August 24
D. September 30
E. November 7
211.How many days will it take for an investment of $5,500 to earn $602.74 interest at 16%?
A. 68
B. 22
C. 230
D. 250
E. 4564
212.Fred puts $5,475 into a term deposit on May 15th. The deposit earns a simple interest rate of 4%.
If the term deposit will mature on August 14th, how much interest will Fred earn?
A. $35.40
B. $24.80
C. $36.00
D. $36.60
E. $54.60
213.John borrowed $1500 at 9.5% on October 10, 2004. On what date did the amount owed first
exceed $1565?
A. March 19, 2005

B. March 23, 2005
C. March 26, 2005
D. March 30, 2005
E. March 17, 2005
214.Morton purchased a 165-day Guaranteed Investment Certificate on October 11. On what date will
it mature?
A. January 11 of the following year.

B. March 25 of the following year.
C. May 5 of the following year.
D. July 3 of the following year.
E. October 11 of the following year.
215.What was the simple interest rate if an investment of $35,000 earned interest of $250 between
April 4 and May 23?
A. 2.66%
B. 5.32%
C. 7.14%
D. 8.00%
E. 9.89%
216.What annual simple interest rate would be needed for $55,000 to grow to $60,000 over a term of
295 days?
A. 12.34%
B. 10.31%
C. 11.25%
D. 9.09%
E. 8.33%
217.How much money would I have to invest at 6 ½% to earn interest of $4,500 per month?
A. $830,769
B. $692,308
C. $462,963
D. $777,667
E. $103,772
218.How much money would I have to invest at 9 ½% to earn interest of $9,200 per month?
A. $1,830,769
B. $2,306,224
C. $1,162,105
D. $5,777,667
E. $1,903,772
219.How many months would it take to earn $1,650 on a deposit of $44,000 at 7 ½%?
A. 4.5 months
B. 12 months
C. 6 months
D. 5 months
E. ½ month
220.How many months would it take to earn $3,570 on a deposit of $84,000 earning 8 ½%?
A. 7.5 months
B. 12 months
C. ¾ month
D. 9 months
E. 6 months
221.How many months would it take to earn $3,300 on a deposit of $84,000 at 9 ½%?
A. 4.14 months
B. 4.96 months
C. 11.2 months
D. 15.3 months
E. 25.4 months
222.Calculate the simple interest rate at which one can earn $1,500 per day interest on an investment
of $7,500,000.
A. 2.00%
B. 9.67%
C. 5.00%
D. 6.67%
E. 7.30%
223.Calculate the simple interest rate at which one can earn $2,200 per day interest on an investment
of $8,500,000.
A. 9.45%
B. 25.86%
C. 3.86%
D. 13.61%
E. 7.30%
224.Calculate the simple interest rate at which one can earn $500 per day interest on an investment
of $1,800,000.
A. 9.45%
B. 28.00%
C. 10.14%
D. 12.91%
E. 25.30%
225.What simple interest rate was used if Rocco charged Squirrel $350 interest on a loan of $2,000
for 41 days?
A. 70%
B. 156%
C. 14.35%
D. 15.58%
E. 175%
226.What simple interest rate was used if Eddie charged Meatball $700 interest on a loan of $5,000
for 26 days?
A. 217%
B. 156%
C. 14%
D. 88%
E. 197%
227.How long would it take for a $25,000 investment to earn $2,000 interest at 13.5%?
A. 271 days
B. 125 days
C. 59 days
D. 217 days
E. 169 days
228.How long would it take for a $45,000 investment to earn $6,000 interest at 17.5%?
A. 115 days
B. 77 days
C. 95 days
D. 377 days
E. 278 days
229.Cindy borrowed $750 from Clare on April 17 at an interest rate of 15%. On June 30 of the same
year, Clare repaid the loan with interest. How much interest should she have paid?
A. $22.81
B. $21.63
C. $28.13
D. $112.50
E. $90.87
230.Ethel invested $3,450 of Fred's money on February 3. Lucy had promised Ethel that the
investment would earn an interest rate of 55%. On February 27 of the same year, Ethel cashed in
her investment and received the interest as Lucy had promised. How much interest had she
earned?
A. $124.77
B. $189.75
C. $218.63
D. $64.98
E. $90.87
231.Carly borrowed $2,500 from Clare on July 18 at an interest rate of 8%. On March 7 of the
following year, Carly repaid the loan with interest. How much interest should she have paid?
A. $72.88
B. $21.63
C. $127.12
D. $112.50
E. $90.87
232.Carly borrowed $450 from Jenn on August 24 at an interest rate of 11%. On January 11 of the
A. $22.81
B. $12.38
C. $21.63
D. $18.99
E. $90.87
233.How much money would have to be invested from June 4 until December 22 at 13%, in order to
earn $750 in interest?
A. $12,840
B. $5,769
C. $2,186
D. $10,477
E. $5,151
234.How much money would have to be invested from December 22 until June 4 at 12% in order to
earn $750 in interest?
A. $12,840
B. $13,910
C. $6,250
D. $10,477
E. $15,151
235.How much money would have to be invested from November 22 until June 29 of the following
year at 19%, in order to earn $950 in interest?
A. $8,333
B. $12,500
C. $5,000
D. $11,351
E. $6,306
236.If $20,000 was invested 82 days ago at an interest rate of 13.75%, what would be the value of
the investment today?
A. $19,401
B. $20,618
C. $22,750
D. $20,000
E. $26,306
237.If, on March 11, $12,000 was placed in an investment earning an interest rate of 16%, on what
day will the amount of interest earned reach $1,000?
A. Jul. 10
B. Jan.19
C. Apr. 13
D. Nov. 1
E. Sept. 18
238.Seven months ago Julie received some money for her birthday and she immediately deposited it
into an account earning 6.5%. Today the value of that deposit has reached $4,259.88. How much
did she deposit 7 months ago?
A. $1,556.20
B. $4,104.26
C. $4,098.36
D. $3,982.99
E. $2,646.45
239.How much money would have to be deposited on March 11 into an account earning a simple
interest rate of 9.5% if the goal is to have the deposit grow to $12,000 by November 1?
A. $10,860.00
B. $11,175.45
C. $14,098.36
D. $11,308.33
E. $11,497.44
240.At what simple annual interest rate would $835 grow to $900 in 5 months?
A. 16.7%
B. 4.5%
C. 7.8%
D. 18.7%
E. 17.3%
241.At what simple annual interest rate would $1,896 grow to $2,000 in 300 days?
A. 6.7%
B. 8.5%
C. 7.8%
D. 5.5%
E. 6.3%
242.An investment of $ 19,250 grew to $20,000 between March 26 and October 10. What simple
annual interest rate did the investment earn?
A. 3.9%
B. 8.5%
C. 6.9%
D. 5.5%
E. 7.2%
243.How many months would it take for $3,500 to grow to $4,000 at 15%?
A. 9.5
B. 11.4
C. 348
D. 10.0
E. 6.6
244.How many days would it take for $9,500 to grow to $10,000 at 7%?
A. 75
B. 188
C. 261
D. 365
E. 275
245.On what day will the amount of interest earned reach $5,000 if $250,000 was invested at an
interest rate of 11% on June 23?
A. Mar. 8
B. Jul. 10
C. Aug. 29
D. Nov. 1
E. Dec. 18
246.On April 3 Artie invested $75,000 and by October 27 he had earned interest of $10,500. What
simple interest rate had he earned?
A. 86.00%
B. 32.34%
C. 71.42%
D. 14.00%
E. 24.69%
247.Dalton loaned $550,000 to Doc Holliday on August 24. On February 8 of the following year, Doc
paid to Dalton the $65,000 interest that had accumulated on the debt up to that time. What
simple rate of interest was Dalton charging on this loan?
A. 21.90%
B. 25.68%
C. 21.79%
D. 74.32%
E. 24.69%
248.Albert loaned $850,000 to Batman on March 17. On January 9 of the following year, Batman paid
to Albert the $49,000 of interest that had accumulated on the debt up to that time. What simple
rate of interest was Albert charging on this loan?
A. 7.06%
B. 25.68%
C. 31.40%
D. 9.65%
E. 17.34%
249.On September 4 Fred made a $25,000 loan to Ricky for an investment that was guaranteed to
earn an interest rate of 40%. On March 11 of the following year, Ricky cashed in his investment
and received the interest as had been promised. How much interest had he earned?
A. $2,965
B. $5,151
C. $2,186
D. $4,849
E. $16,083
250.On December 19 Jerry's $800 deposit matured at $848.22. It had been earning 8%. What was
the date that he made the deposit?
A. Oct. 2
B. Jan. 1
C. Mar. 19
D. Sept. 20
E. Apr. 1
251.Barkley's Bookkeeper is accounting for a cheque that was written for $29,674. It represents full
payment of principal plus interest for a loan that was taken out for 128 days at 8.5%. How much
of the $ 29,674 was interest?
A. $2,881.51
B. $884.52
C. $1,768.33
D. $858.93
E. $726.98
252.If the maturity value of an investment which paid 13.9% was $400,000 after 7 months, how much
of that amount was interest?
A. $30,001
B. $55,600
C. $32,433
D. $67,888
E. $27,999
253.Grandma Jones has $300,000 in a bank account, which pays her interest at 3%. What is the
largest amount of money that she could take out now and still leave enough in the account so
that she can earn $600 per month in interest?
A. $60,000
B. $100,000
C. $280,000
D. $240,000
E. $9,000
254.Grandpa Smith has $200,000 in a bank account, which pays him interest at 4%. What is the
largest amount of money that he could take out now and still leave enough in the account so that
he can earn $500 per month in interest?
A. $60,000
B. $50,000
C. $120,000
D. $150,000
E. $30,000
255.After 7 months at an interest rate of 13%, an investment matured today at a value of $80,000.
How much of the $80,000 is interest?
A. $12,065
B. $10,400
C. $6,067
D. $7,436
E. $5,639
256.On May 27, Kristina made an investment that earned an interest rate of 9.4%. By November 6
the investment's value had increased to $77,000. What amount of interest had Kristina earned?
A. $3,619
B. $3,102
C. $3,232
D. $5,112
E. $7,238
257.Susan wants a 120-day extension on a payment of $2,000. If she and her creditor agree that
money can now earn 6%, what amount should she pay at the later date?
A. $1,961.31
B. $2,038.69
C. $2,079.95
D. $2,039.45
E. $2,080.55
258.Ace Furniture will give you 8 months, interest free, before you have to pay for a $2,000 sofa.
Based on the fact that Ace pays 14% on its short term debt, what would be a reasonable amount
of cash for you to offer them at the time of purchase?
A. $2,187
B. $1,829
C. $1,720
D. $1,813
E. $2,000
259.If you pay your $3,000 tuition 3 months before it is due, the local college will give you a $250
"scholarship" reducing your tuition payment to $2,750. What is the annual simple interest rate to
which this incentive is equal?
A. 36.4%
B. 9.1%
C. 8.3%
D. 33.3%
E. 27.3%
260.If money is worth 14 %, what payment on August 29 would be equal in value to a payment of
$86,900 due on January 31 of the following year?
A. $74,734
B. $92,066
C. $81,734
D. $76,519
E. $82,024
261.What payment 5 months from now would be equivalent in value to a $4,000 payment due today
and a $3,000 payment due 7 months from now? Money can earn 6.5%.
A. $7,455.01
B. $6,923.82
C. $7,189.58
D. $7,076.18
E. $6,544.98
262.Payments of $100,000 and $150,000 are due to be paid in 45 days and 75 days respectively. If
money is worth 7.3%, what is the combined economic value today of the two payments?
A. $574,734
B. $246,891
C. $249,452
D. $276,519
E. $229,567
263.Patrick has a contract that will pay him $3,500 in 11 months. If money can earn 15%, what will be
the value of that contract three months from now?
A. $2,975
B. $3,077
C. $3,150
D. $3,182
E. $3,355
264.Mike is supposed to pay $750 to Sarah, but wishes to delay it for 48 days. Determine the amount
Sarah should expect in 48 days if the rate of interest is 6.55%
A. $756.46
B. $765.66
C. $771.55
D. $793.12
E. $795.61
265.David is supposed to pay $975 to Mark, but wishes to delay it for 6 months. Determine the
amount Mark should expect in 6 months if the rate of interest is 4.75%
A. $992.68
B. $998.16
C. $1,002.45
D. $1,007.67
E. $1,012.37
266.Michaela is supposed to pay $15,000 to Mahmoud, but due to financial constraints, has to be
delayed by on quarter. Determine the future amount if the rate of interest is 11.45%
A. $14,618.43
B. $14,727.31
C. $15,429.38
D. $15,631.42
E. $17,727.66
267.If $4,000 is to be paid now. What amount would be equivalent 97 days earlier given an interest
rate of 4.25% per year?
A. $3,955.33
B. $3,844.22
C. $3,733.11
D. $3,622.00
E. $4,421.67
268.If $7,500 is to be paid now, what amount would be equivalent 8 months earlier given an interest
A. $7,621.85
B. $7,310.89
C. $6,822.14
D. $6,219.65
E. $7,210.33
269.$180 is to be paid now. What amount would be equivalent 3 quarters earlier given an interest rate
of 6.8% per year?
A. $184.33
B. $212.14
C. $171.27
D. $166.81
E. $191.54
270.John can purchase an airline ticket for $540 now or can pay $578 in 90 days. If interest is 6.6%,
determine whether John should purchase the ticket now or in 90 days.
A. Buy now - savings of $28.74

B. Buy now - savings of $34.22
C. No difference between the two options
D. Buy later - savings of $28.74
E. Buy later - savings of $34.22
271.Alain can purchase an airline ticket for $500 now or can pay $525 in 3 months. If interest is 2.5%,
determine whether Alain should purchase the ticket now or in 3 months.
A. Buy now - Savings of $33.88

B. Buy now - Savings of $21.74
C. No difference between two options
272.A department store is offering a washer/dryer for $1480 now or can pay $1500 in 120 days. If
interest is 8.52%, determine whether a customer should purchase now or in 120 days.

273.A department store is offering a television for $720 now or can pay $725 in 90 days. If interest is
10%, determine whether a customer should purchase now or in 90 days.

274.If money if worth $650 now and $675 in 3 months, determine the rate of return that an investor
would be indifferent between the two options.
A. 15.38%
B. 14.22%
C. 13.85%
D. 12.52%
E. 10.60%
275.If money if worth $985 now and $1005 in two months, determine the rate of return that an
investor would be indifferent between the two options.
A. 15.41%
B. 14.62%
C. 13.83%
D. 12.18%
E. 13.44%
276.If money if worth $1,150 now and $1,205 in 240 days, determine the rate of return that an
A. 9.15%
B. 8.38%
C. 8.41%
D. 7.50%
E. 7.27%
277.If money if worth $1,500 now and $1,540 in 90 days, determine the rate of return that an investor
A. 12.45%
B. 11.23%
C. 10.81%
D. 9.63%
E. 8.85%
278.Compare the economic values of two options given an annual rate of 6.6%. Option 1 - $900 in 90
days and $1,200 in 120 days. Option 2 - $850 in 240 days and $1,390 in 320 days. Given the
following information, choose the best option.
A. Option 1 - benefit of $22.35

B. Option 1 - benefit of $68.51
C. No difference between options
D. Option 2 - benefit of $22.35
E. Option 2 - benefit of $68.51
days and $1,200 in 180 days. Option 2 - $925 in 90 days and $1,050 in 120 days. Given the

months and $400 in 9 months. Option 2 - $550 in 7 months and $825 in 10 months. Given the

281.Compare the economic values of two options given an annual rate of 4.5%. Option 1 - $1,100 in
1 month and $850 in 3 months. Option 2 - $1,050 in 6 months and $925 in 9 months. Given the

282.Payments of $6,000 six months ago and $3,000 one month ago are to be replaced by $5,000 in 9
months and another payment today. If interest is 4.2% annually, determine the price of the
payment today.
A. $4,289.19
B. $4,372.66
C. $5,433.80
D. $5,526.32
E. $7,428.37
283.Payments of $7,000 120 days ago and $3,000 90 days ago are to be replaced by $4,500 60 days
from now and a final payment 240 days from now. If interest is 5.95% annually, determine the
value of the final payment.
A. $4,851.61
B. $4,926.86
C. $5,424.38
D. $5,727.60
E. $5,940.14
284.Two payments of $5,000 60 days ago and $5,000 in 120 days are to be replaced by a payment
now and $4,000 in 90 days. If interest is 3.2% annually, determine the amount to pay now, if the
focal point is today.
A. $6,012.40
B. $6,018.50
C. $6,005.57
D. $6,003.20
E. $5,996.60
285.Payments of $2,500 due now and $6,500 due in 90 days are to be replaced by a $4,000 payment
due in 120 days and a final payment due in 180 days from now. If interest is 5.5% annually,
determine the value of the final payment if the focal point is 180 days from now.
A. $5,220.67
B. $5,207.38
C. $5,163.45
D. $5,119.80
E. $5,087.63
286.Two payments of $1,000 now and $3,000 in 6 months are to be replaced by $2,500 in 4 months
and another in 9 months. If the rate of interest is 6.3% annually, determine the value of the final
payment in 9 months if the focal point is in 9 months.
A. $1,532.67
B. $1,528.875
C. $1,502.65
D. $1,498.13
E. $1,486.86
287.Two payments of $8,000 in 60 days and $5,000 in 90 days are to be replaced by a payment now
and another payment of $2,500 in 30 days. If interest is 7.3% annually, determine the value of the
payment now.
A. $10,658.12
B. $10,522.44
C. $10,485.31
D. $10,331.64
E. $10,280.48
288.$8,000 due now is to be replaced by three equal payments in 2, 6 and 9 months from today. If
interest is 6.75% annually, determine the value of the payments.
A. $2,145.62
B. $2,381.06
C. $2,573.25
D. $2.648.67
E. $2,750.99
289.A loan of $1,580 bearing interest at 15% is due nine months from now. What single payment
three months before the loan is due will put the lender in the same financial position as the
scheduled payment at maturity? Assume that money can earn 12%.
A. $1,658.25
B. $1,533.98
C. $1,706.55
D. $1,490.57
E. $1,642.38
290.Payments of $700 due three months ago and $1,000 six months from now are to be replaced by
one equivalent payment four months from now. What is the size of this payment if money can
earn 7%?
A. $1,661.01
B. $1,700.72
C. $1,708.72
D. $1,717.05
E. $1,740.25
291.Payments of $1,400 and $2,500 were due 90 days ago and 120 days ago, respectively. What is
the combined economic value today of these payments if money can earn 9%?
A. $3,943.58
B. $3,859.22
C. $4,005.04
D. $4,111.11
E. $3,797.76
292.$12,000 due today is to be replaced by three equal payments in 30, 60 and 90 days from today. If
interest is 8.4% annually, determine the value of the payments. Use a focal date of today.
A. $4,055.87
B. $4,165.26
C. $4,276.65
D. $4,387.42
E. $4,598.57
293.$22,000 was due 90 days ago. It is now to be repaid in three equal payments in 30, 60 and 180
days from now. If interest is 5.92% annually, determine the value if the focal date is today.
A. $8,627.35
B. $7,935.12
C. $7,727.54
D. $7,549.67
E. $7,182.67
294.$7,500 was due 3 months ago. It is now to be repaid in three equal payments in 4, 8 and 10
months from now. If interest is 3.85% annually, determine the value if the focal date is in 4
months.
A. $2,583.98
B. $2,678.32
C. $2,781.42
D. $2,934.55
E. $3,122.68
295.An $18,000 payment due in 300 days is to be replaced by three equal payments now, in 150
days and 250 days. Determine the value of the payments if interest is 10.2% annually, and the
focal point is now.
A. $6,142.51
B. $5,913.75
C. $5,823.89
D. $5,738.38
E. $5,421.03
296.Mike borrowed $6,000 on August 15 at a rate of 9.3% annually. Two payments of $2,000 were
made on September 1 and November 1 to reduce the loan. What amount should be paid on
December 15 to pay off the loan?
A. $3,861.05
B. $2,110.58
C. $4, 258.23
D. $5, 815.01
E. $6,005.37
297.Two debt payments of $2,000 each are due now and nine months from now. If money is worth
8%, what single payment six months from now is required to settle the debt?
A. $4,042.34
B. $7,177.27
C. $6,127.48
D. $3,600.00
E. $4,040.78
298.What single payment one year from now will satisfy two obligations: $4,000 due today and
$6,000 due 18 months from now? Assume that money can earn 14%.
A. $5,083.74
B. $5,000.00
C. $10,980.00
D. $10,167.48
E. $5,490.00
299.A $3,000 obligation due eight months from now is settled by two equal payments, one five
months from now and the other nine months from now. If money can earn interest at 16%, what
is the size of each payment? Use a focal date five months from now.
A. $3,038.46
B. $1,723.64
C. $861.82
D. $1,479.77
E. $2,959.54
300.Frankie's Furniture Mart has contracts from one customer who will pay $4,695 in 5 months and
another customer who will pay $7,830 in 7 months. Frankie can sell the contracts today to
Vinnie's finance company at a discount rate of 23.5%. How much money will Vinnie pay to
Frankie today for the two contracts?
A. $11,162
B. $11,208
C. $12,525
D. $13,705
E. $14,058
301.A payment of $590 is now 93 days overdue. A second payment of $955 will be due and payable
in 200 days. If money can earn an interest rate of 11%, what single amount, paid in 30 days, will
be an equivalent replacement payment?
A. $1,507
B. $1,520
C. $1,545
D. $1,629
E. $1,783
302.A contract was signed eight months ago requiring the payment of $13,000 plus interest at 8%
after one year. What two equal payments made today and four months from today are equivalent
to the original contract? Assume that money is now worth 5%. Use four months from today as the
focal date.
A. $7,020.00
B. $7,070.11
C. $6,446.28
D. $13,809.84
E. $7,078.02
CHAPTER 6 Key
$21.88
Difficulty: Easy
Jerome - Chapter 06 #1
Learning Objective: 06-01 Calculate interest; rate; term; maturity value (future value); and present value in a simple interest environment
Source: Student text
Topic: Simple Interest
Type: Word
$3,499.96
Difficulty: Easy
Type: Word
8 months
Difficulty: Easy
Type: Word
8.75%
Difficulty: Easy
Type: Word
$272.57
Difficulty: Easy
Type: Word
6. How much interest will be earned on $5,000 in 5 months if the annual simple interest rate is
1.5%?
$31.25
Difficulty: Easy
Type: Word
7. An invoice states that interest will be charged on overdue accounts at the rate of 1½% per
month. What will be the interest charges on a $3,760 billing that is 3 months overdue?
$169.20
Difficulty: Medium
Type: Word
8. The interest owed on a loan after 5 months was $292.50. If the simple interest rate charged on
the loan was 0.9% per month, what was the amount borrowed?
$6,500.00
Difficulty: Easy
Type: Word
9. How much must be placed in a 5-month term deposit earning 4.3%, simple interest, in order to
earn $500 interest?
$27,906.98
Difficulty: Easy
Type: Word
10. A five-month term deposit of $10,000 at the Scotiabank earned $75 in interest. What annual
rate of simple interest did the deposit earn?
9%
Difficulty: Easy
Type: Word
11. On June 26, 2013, $1000 was borrowed at an interest rate of 10.75%. On what date was the
loan repaid if the amount of accrued interest was $63.91?
January 29, 2014
Difficulty: Easy
Type: Word
12. On June 26 Laura put $2,750 into a term deposit until September 3, when she needs the
money for tuition, books, and other expenses to return to college. For term deposits in the 60-
89-day range, her credit union pays an interest rate of 4.25%. How much interest will she earn
on the term deposit?
$22.09
Difficulty: Easy
Type: Word
13. Raimo borrowed $750 from Chris on October 30 and agreed to repay the debt with simple
interest at the rate of 4.3% on May 10. How much interest was owed on May 10? Assume that
February has 28 days.
$16.96
Difficulty: Easy
Type: Word
14. Joyce had $2,149 in her daily interest savings account for the entire month of June. Her
account was credited with interest of $2.65 on June 30 (for the exact number of days in June).
What annual rate of simple interest did her balance earn?
1.50%
Difficulty: Easy
Type: Word
15. Maia's chequing account was $329 overdrawn beginning on September 24. On October 9 she
made a deposit that restored a credit balance. If she was charged overdraft interest of $2.50,
what annual rate of simple interest was charged?
18.49%
Difficulty: Easy
Type: Word
16. What will be the maturity value after seven months of $2950 earning interest at the rate of
4.5%?
$3,027.44
Difficulty: Easy
Type: Word
17. $12,800 was invested in a 237 day term deposit earning 3.75%. What was its maturity value?
$13,111.67
Difficulty: Easy
Type: Word
18. After a term of 23 days, a loan at 10.5% has a maturity value of $785.16. What was the
principal value of the loan?
$780.00
Difficulty: Easy
Type: Word
19. The maturity value of an investment earning 7.7% per annum for a 360 day term was
$2291.01. What amount was originally invested?
$2,129.30
Difficulty: Easy
Type: Word
20. A $7760 investment earning 6.25% matured at $8083.33. What was the term (in months) of
the investment?
8 months
Difficulty: Easy
Type: Word
21. In addition to a $2,163 refund of his income tax overpayment, the Canada Revenue Agency
(CRA) paid Raisa $13.36 of interest on the overpayment. If the simple interest rate paid by
Revenue Canada was 5.5%, how many days' interest was paid?
41 days
Difficulty: Medium
Type: Word
22. Marta borrowed $1,750 from Jasper on November 15, 2014, and agreed to repay the debt with
simple interest at the rate of 7.4% on June 3, 2015. How much interest was owed on June 3?
$70.96
Difficulty: Easy
Type: Word
23. Petra has forgotten the rate of simple interest she earned on a 120-day term deposit at
Scotiabank. At the end of the 120 days, she received interest of $327.95 on her $21,000
deposit. What rate of simple interest was her deposit earning?
4.75%
Difficulty: Easy
Type: Word
24. Indira paid interest charges of $169.05 on a $4830 invoice that was two months overdue.
What monthly rate of simple interest was she charged?
1.75% per month
Difficulty: Medium
Type: Word
25. Megan was charged $124.83 interest on her bank loan for the period September 18 to
October 18. If the rate of interest on her loan was 8.25%, what was the outstanding principal
balance on the loan during the period?
$18,409.27
Difficulty: Medium
Type: Word
26. Morgan loaned $3,100 to Rolf at a simple interest rate of 0.65% per month. What was the term
of loan if the total interest came to $221.65?
11 months
Difficulty: Medium
Type: Word
27. What was the principal amount of a loan at 9.5% if $67.78 of interest accrued from October
28, 2013 to April 14, 2014?
$1,550.11
Difficulty: Medium
Type: Word
28. On what date was a $1000 loan granted if the interest accrued as of November 16, 2013 was
$50.05? The interest rate on the loan was 7.25%.
March 9, 2013
Difficulty: Medium
Type: Word
29. Asher cashed in a one-year term deposit after only five months had elapsed. In order to do so,
he accepted an interest rate penalty—a reduction from the scheduled 5.5% rate of simple
interest. If he was paid $145.83 interest on the $10,000 term deposit, what reduction was
made in the per-annum rate of simple interest?
2.0% reduction
Difficulty: Medium
Type: Word
30. The balance after 11 months, including, on a loan at 9.9% is $15,379.58. What are the
principal and interest components of the balance?
$14,100.00 (Principal) and $1279.58 (Interest).
Difficulty: Medium
Type: Word
31. $7348.25 was the amount required to pay off a loan after 14 months. If the loan was at 8.25%
per annum simple interest, how much of the total was interest?
$645.17 Interest
Difficulty: Medium
Type: Word
32. What was the interest rate on a $1750 loan if the amount required to pay off the loan after five
months was $1,828.02?
10.70%
Difficulty: Medium
Type: Word
33. A $2875.40 investment grew to $3000 after eight months. What annual rate of simple interest
did it earn?
6.50%
Difficulty: Medium
Type: Word
34. Marliss made a $780.82 purchase on her Visa card. Including 45 days' interest, the amount
billed on her credit card was $798.63. What annual interest rate does her card charge?
18.50%
Difficulty: Medium
Type: Word
35. The bookkeeper for Durham's Garage is trying to allocate to principal and interest a payment
that was made to settle a loan. The cheque stub has the note "$3,701.56 for principal and 7
months' interest at 12.5%." What are the principal and interest components of the payment?
$3,450.00 (Principal) and $251.56 (Interest)
Difficulty: Medium
Type: Word
36. Umberto borrowed $7,500 from Delores on November 7, 2013. When Umberto repaid the
loan, Delores charged him $190.02 interest. If the rate of simple interest on the loan was
6.75%, on what date did Umberto repay the loan?
March 24, 2013
Difficulty: Medium
Type: Word
37. Jacques received the proceeds from an inheritance on March 15. He wants to set aside, in a
term deposit on March 16, an amount sufficient to provide a $45,000 down payment for the
purchase of a home on November 1. If the current interest rate on 181-day to 270-day
deposits is 3.75%, what amount should he place in the term deposit?
$43,426.53
Difficulty: Medium
Type: Word
38. If $3,702.40 earned $212.45 interest from September 17, 2014 to March 11, 2015, what rate of
interest was earned?
11.97%
Difficulty: Medium
Type: Word
39. A loan of $3,300 at 9.25% simple interest was made on March 27. On what date was it repaid
if the interest cost was $137.99?
September 8
Difficulty: Medium
Type: Word
40. What amount invested at 4.5% on November 19, 2014 had a maturity value of $10,000 on
March 3, 2015?
$9,872.20
Difficulty: Medium
Type: Word
41. Sumer put $10,000 in a 3-month term deposit at TD Canada Trust, earning a simple interest
rate of 3.9% pa. After the 3 months, she invested the entire amount of the principal and
interest from the first term deposit in a new 3-month term deposit earning the same rate of
interest. How much interest did she earn on each term deposit? Why are the two interest
amounts not equal?
Interest on first term deposit = $97.50 and Interest on second term deposit = $98.45 The two
interest amounts are not equal because they are based on different principal values.
Difficulty: Hard
Type: Word
42. Sergon has $5,000 to invest for six months. The rates offered on three-month and six-month
term deposits at his bank are 3.5%3.8%, respectively. He is trying to choose between the six-
month term deposit and two consecutive three-month term deposits. What would the simple
interest rate on three-month term deposits have to be, three months from now, for Sergon to
end up in the same financial position with either alternative? Assume that he would place both
the principal and interest from the first three-month term deposit in the second three-month
term deposit.
4.06%
Difficulty: Hard
Type: Word
43. Evelyn put $15,000 into a 90-day term deposit at Laurentian Bank paying a simple interest
rate of 3.2%. When the term deposit matured, she invested the entire amount of the principal
and interest from the first term deposit into a new 90-day term deposit earning the same rate
of interest. What total amount of interest did she earn on both term deposits?
$237.65
Difficulty: Hard
Type: Word
44. Mario borrowed $6,000 on March 1 at a variable rate of interest. The interest rate began at
7.5%, increased to 8% effective April 17, and then fell by 0.25% effective June 30. How much
interest will be owed on the August 1 repayment date?
$196.03
Difficulty: Hard
Type: Word
45. How much will be required on February 1 to pay off a $3,000 loan advanced on the previous
September 30 if the variable interest rate began the interval at 10.7%, rose to 11.2% effective
November 2, and then dropped back to 11% effective January 1?
$3,112.28
Difficulty: Hard
Type: Word
46. The total accrued interest owed as of August 31 on a loan advanced the preceding June 3 was
$169.66. If the variable interest rate started at 8.75%, rose to 9% effective July 1, and
increased another 0.5% effective July 31, what was the principal amount of the loan?
$7,649.89
Difficulty: Hard
Type: Word
47. The annual $3,600 membership fee at the Oak Meadows Golf Club is due at the beginning of
the year. Instead of a single "lump" payment, a member can pay $1,600 at the start of the year
and defer the $2,000 balance for five months by paying a $75 surcharge at the time of the
second payment. Effectively, what annual rate of simple interest is Oak Meadows charging on
the $2,000 deferred payment?
9.00%
Difficulty: Hard
Type: Word
48. Today is March 25th. Snow tires that you need are available today at a sale price of $89.95
each. If you wait until October 1 to buy the tires, you will pay the full price of $107.50 each. If
you buy the tires today, you will need to borrow money at 12% per annum simple interest.
Should you buy the tires today or wait until October 1. Explain.
Buy the 4 tires today and borrow the money. It will save you $47.72 on purchasing 4 tires.
Difficulty: Hard
Type: Word
49. A&B Appliances sells a washer-dryer combination for $1535 cash. C&D Appliances offers the
same combination for $1,595 with no payments and no interest for 6 months. Therefore, you
can pay $1,535 now or invest the $1535 for 6 months and then pay $1,595. What value would
the annual rate of return have to exceed for the second alternative to be your advantage?
7.82%
Difficulty: Hard
Type: Word
50. What is meant by "equivalent payments"?
"Equivalent payments" are alternative payments (on different dates) that will put the recipient
in the same economic position.
Difficulty: Easy
Learning Objective: 06-02 Calculate the equivalent value on any date of a single payment or a stream of payments
Type: Concept
51. What amount of money paid today is equivalent to $560 paid five months from now if money
can earn 1.75% per annum?
$555.95
Difficulty: Easy
Type: Word
52. What amount, seven months from now, is equivalent to $1215 today if money can be invested
to earn 4.5%?
$1,246.89
Difficulty: Easy
Type: Word
53. What payment, 174 days from now, is equivalent to $5230 paid today? Assume that money is
worth 5.25% per annum.
$5,360.89
Difficulty: Easy
Type: Word
54. Patrick is scheduled to receive $1480 in 60 days from now. How much should he accept today
as an equivalent payment if his money can earn 6.75%?
$1,463.76
Difficulty: Easy
Type: Word
55. What amount received on January 13 is equivalent to $1,000 received on the preceding
August 12 if money can earn 5.5%?
$1,23.21
Difficulty: Easy
Type: Word
56. Rasheed wishes to postpone for 90 days the payment of $450 that he owes to Roxanne. If
money now earns 4.75%, what amount can he reasonably expect to pay at the later date?
$455.27
Difficulty: Easy
Type: Word
57. Avril owes Value Furniture $1,600, which is scheduled to be paid on August 15. Avril has
surplus funds on June 15 and will settle the debt early if Value Furniture will make an
adjustment reflecting the current short-term interest rate of 3.25%. What amount should be
acceptable to both parties?
$1,591.36
Difficulty: Easy
Type: Word
58. What amount on January 23 is equivalent to $1,000 on the preceding August 18 if money can
earn 6.5%?
$1,028.14
Difficulty: Easy
Type: Word
59. What annual rate of return would money have to earn for $1975.00 to be equivalent to
$1936.53 paid 100 days earlier?
7.25%
Difficulty: Medium
Type: Word
60. At what rate can money be invested if $2370.00 is equivalent to $2508.79 paid 190 days
later?
11.25%
Difficulty: Medium
Type: Word
61. A late payment of $850.26 was considered equivalent to the originally scheduled payment of
$830.00, allowing for interest at 9.9%. How many days late was the payment?
90 days later
Difficulty: Medium
Type: Word
62. Nicholas can purchase the same furniture from Store A for $2,495 cash or from Store B for
$2,560 with nothing down and no payments or interest for 8 months. Which option should
Nicholas choose if he can pay for the furniture by cashing in Canada Savings Bonds currently
earning 3.9% per annum?
loan = 3.91%; the two options are essentially equivalent
Difficulty: Medium
Type: Word
63. During its 50-50 Sale, Marpole Furniture will sell its merchandise for 50% down, with the
balance payable in six months. No interest is charged for the first six months. What 100%
cash price should Marpole accept on a $1,845 chesterfield and chair set if Marpole can earn a
rate of return of 2.75% on its funds?
$1,832.49
Difficulty: Medium
Type: Word
64. Sheldrick Contracting owes Western Equipment $60,000 payable on June 14. In late April,
Sheldrick has surplus cash and wants to settle its debt. If Western can earn 3.6% on its
money, how much should Western accept on April 29?
$59,729.01
Difficulty: Medium
Type: Word
65. Peter and Reesa can book their Horizon Holiday package at the early-booking price of $3,850,
or wait four months and pay the full price of $3,995.
a) Which option should they select if money can earn a 5.25% rate of return? In current
dollars, how much do they save by selecting the preferred option?
b) Which option should they select if money can earn a 9.75% rate of return? In current
dollars, how much do they save by selecting the preferred option?
c) At what interest rate would they be indifferent between the two prices?
a) Peter and Reesa will save $76.29 in current dollars by paying the early-booking price; b)
Peter and Reesa will save $19.25 in current dollars by paying the early booking price c)
11.30%
Difficulty: Medium
Type: Word
66. Mr. and Mrs. Chan have listed for sale a residential building lot they own in a nearby town.
They are considering two offers. The offer from the Smiths is for $145,000 consisting of
$45,000 down and the balance to be paid in six months. The offer from the Kims is for
$149,000 consisting of $29,000 down and $120,000 payable in one year. The Chans can earn
an interest rate of 4.5% on low-risk short-term investments.
a) What is the current economic value to the Chans of each offer?

b) Other things being equal, which offer should the Chans accept? How much more is the
better offer worth (in terms of current economic value)?
a) $143,832.54; b) Kim's offer worth $1,033.03 more
Difficulty: Hard
Type: Word
67. Westwood Homes is beginning work on its future College Park sub-division. Westwood is now
pre-selling homes that will be ready for occupancy in nine months. Westwood is offering
$5,000 off the $295,000 selling price to anyone making an immediate $130,000 down payment
(with the balance due in nine months.) The alternative is a $5,000 deposit with the $290,000
balance due in nine months. Mr. and Mrs. Symbaluk are trying to decide which option to
choose. They currently earn 4.8% on low-risk short-term investments.
a) What is the current economic cost of buying on the $130,000-down $5,000-off option?
b) What is the current economic cost of buying on the $5,000-deposit full-price option?
c) Which alternative should the Symbaluks choose? In current dollars, what is the economic
advantage of the preferred alternative?
a) $284,440.15 b) $284,922.78; c) the $130,000 down option saves $482.63
Difficulty: Hard
Type: Word
68. What is meant by the "time value of money"?
The economic value of a nominal amount of money depends on the date when it is paid. This
property of money is called the time value of money.
Difficulty: Easy
Learning Objective: 06-03 Present details of the amount and timing of payments in a time diagram
Type: Concept
69. We frequently hear a news item that goes something like: "Joe Superstar signed a 5-year deal
worth $25 million. Under the contract he will be paid $3 million, $4 million, $5 million, $6 million
and $7 million in successive years." In what respect is the statement incorrect? How should
the value of the contract be calculated?
By simply adding the nominal amounts of the future payments, the statement ignores the time
value of money. Most people will interpret the "value of the contract" in terms of current dollars.
Therefore, the quoted value of the contract should be the present value of the future
payments.
Difficulty: Easy
Type: Concept
70. How do you determine the economic value on a particular date of a series of payments?
Calculate the sum of the equivalent values of the payments on the chosen date.
Difficulty: Easy
Type: Concept
71. How can you determine whether two payment streams are equivalent to each other?
For each payment stream, calculate the sum of the equivalent values of its payment on the
same focal date. If the two sums are equal, the two streams are equal.
Difficulty: Easy
Type: Concept
72. Calculate the combined equivalent value today of $500 due today and $300 due in three
months. Assume that money can earn 95%.
$830.88
Difficulty: Easy
Type: Word
73. Calculate the combined equivalent value in five months from now of a payment stream
consisting of $1000 payable today and $1500 payable in five months? Assume money can
earn 5.5%.
$2,488.82
Difficulty: Easy
Type: Word
74. Payments of $850 and $1,140 were scheduled to be paid today and nine months from now,
respectively. What total payment today would place the payee in the same financial position as
the scheduled payments? Money can earn 8.25%.
$1,923.57
Difficulty: Easy
Type: Word
75. Payments of $900 and $1000 are due in 30 days and 210 days respectively. If money can be
invested at 7.75% what single payment 90 days from now is equivalent to that payment
stream?
$1,886.62
Difficulty: Medium
Type: Word
76. A payment stream consists of three payments:$1000 today, $1500 in 70 days, and $2000 in
210 days. What single payment, 60 days from now, is economically equivalent to the payment
stream if money can be invested at a rate of 8.5%?
$4,442.98
Difficulty: Medium
Type: Word
77. Two payments of $1,300 and $1,800 were scheduled to be paid five months ago and three
months from now, respectively. The $1,300 payment has not yet been made. What single
payment at a focal date one month from now would be equivalent to the two scheduled
payments if money can earn 4.5 %?
$3,115.85
Difficulty: Medium
Type: Word
78. If money earns 9.5%, calculate and compare the economic value today of the following
payment streams:
a) Payments of $900 and $1,400 due 150 and 80 days ago, respectively.
b) Payments of $800, $600, and $1,000 due 30, 75, and 125 days from now, respectively.
a) $2,364.29; b) $2,350.80
Difficulty: Medium
Type: Word
79. What is the economic value today of each of the following payment streams if money can earn
7.5%? (Note that the two streams have the same total nominal value.)
a) $1,000, $3,000, and $2,000 due in one, three, and five months, respectively.
b) Two $3,000 payments due two and four months from now.
a) $5,877.97; b) $5,889.79
Difficulty: Medium
Type: Word
80. A $3000 loan at 5% was made on March 1. Two payments of $1000 each were made on May
1 and June 1. What payment on July 1 will pay off the loan?
$1,037.79
Difficulty: Medium
Type: Word
81. A $1000 loan at 3% was repaid by two equal payments made 30 days and 60 days after the
date of the loan. Determine the amount of each payment.
$501.85
Difficulty: Medium
Type: Word
82. Two equal payments, 50 days and 150 days after the date of the loan, paid off a $3000 loan at
8.25%. What was the amount of each payment?
$1,533.72
Difficulty: Medium
Type: Word
83. Payments of $1,000 and $7,500 were originally scheduled to be paid five months ago and four
months from now, respectively. The first payment was not made. What payment two months
from now is equivalent to the scheduled payment if money can earn 6.25%?
$8,459.14
Difficulty: Medium
Type: Word
84. If money earns 7.5%, calculate and compare the economic value today of the following
payment streams:
a) Payments of $1,800 and $2,800 made 150 and 90 days ago, respectively.
b) Payments of $1,600, $1,200, and $2,000 due 30, 75, and 120 days from now, respectively.
a) $4,707.26; b) $4,723.86
Difficulty: Medium
Type: Word
85. Eight months ago, Louise agreed to pay Thelma $750 and $950 six and twelve months,
respectively, from the date of the agreement. With each payment, Louise agreed to pay
interest on the respective principal at the rate of 9.5% from the date of the agreement. Louise
failed to make the first payment and now wishes to settle her obligations with a single payment
four months from now. What payment should Thelma be willing to accept if money can earn
7.75%?
$1,856.32
Difficulty: Hard
Type: Word
86. Payments of $2,600, due 50 days ago, and $3,100, due in 40 days, are to be replaced by
$3,000 today and another payment in 30 days. What must the second payment be if the payee
is to end up in an equivalent financial position? Money now earns 8.25%. Use 30 days from
now as the focal date.
$2,719.68
Difficulty: Hard
Type: Word
87. Three payments of $2,000 (originally due six months ago, today, and six months from now)
have been renegotiated to two payments: $3,000 one month from now and a second payment
due in four months. What must the second payment be for the replacement payments to be
equivalent to the originally scheduled payments? Assume that money can earn an interest rate
of 4%. Choose a focal date four months from now.
$3,050.09
Difficulty: Hard
Type: Word
88. What should be the amount of each payment if a $2500 loan at 8.75% is to be repaid by three
equal payments due two months, four months, and seven months following the date of the
loan?
$859.48
Difficulty: Hard
Type: Word
89. The simple interest rate on a $5,000 loan is 7%. The loan is to be repaid by four equal
payments on dates 100, 150, 200, and 250 days from the date on which the loan was
advanced. What is the amount of each payment?
$1,291.81
Difficulty: Hard
Type: Word
90. Anthony borrowed $7,500 on September 15 and agreed to repay the loan by three equal
payments on the following November 10, December 30, and February 28. Calculate the
payment size if the interest rate on the loan was 8.75%.
$2,565.24
Difficulty: Hard
Type: Word
91. Mr. & Mrs. Parsons are considering two offers to purchase their summer cottage. Offer A is for
$200,000 consisting of an immediate $40,000 down payment with the $160,000 balance
payable one year later. Offer B is for $196,500 made up of a $30,000 down payment and the
$166,500 balance payable in six months.
a) If money can earn 4%, what is the current economic value of each offer?
b) Other things being equal, which offer should the Parsons accept? What is the economic
advantage of the preferred offer over the other offer?
c) If money can earn 6%, which offer should the Parsons accept? What is the economic
advantage of the preferred offer?
a) $193,846.15 & $193,235.29; b) offer A worth $610.86 more; c) offer B worth $707.09 more
Difficulty: Hard
Type: Word
92. Nine months ago, Muriel agreed to pay Aisha $1,200 and $800 on dates 6 and 12 months,
respectively, from the date of the agreement. With each payment Muriel agreed to pay interest
at the rate of 8.5% from the date of the agreement. Muriel failed to make the first payment and
now wishes to settle her obligations with a single payment four months from now. What
payment should Aisha be willing to accept if money can earn 6.75%?
$2,173.14
Difficulty: Hard
Type: Word
93. A $9,000 loan is to be repaid in three equal payments occurring 60, 180, and 300 days,
respectively, after the date of the loan. Calculate the size of these payments if the interest rate
on the loan is 7.25%. Use the loan date as the focal date.
$3,106.16
Difficulty: Hard
Type: Word
94. Thad is planning to buy a rototiller next spring at an expected price of $579. In the current fall
"flyer" from Evergreen Lawn and Garden, the model he wants is advertised at $499.95 in a
Fall Clearance Special.
a) If money can earn 4%, what is the economic value on the preceding September 15 of the
$579 that Thad will pay to purchase the rototiller next April 1? (Assume that February has 28
days.)
b) What are his true economic savings if he purchases the rototiller at the sale price of
$499.95 on September 15?
c) What interest rate would money have to earn for Thad to be indifferent between buying the
rototiller at $499.95 on September 15 versus buying it for $579 on the subsequent April 1?
a) $566.70; b) $66.75; c) 29.15%
Difficulty: Hard
Type: Word
$825.00
Difficulty: Easy
Source: Test bank
Type: Word
7 months
Difficulty: Easy
Source: Test bank
Type: Word
1.25% per month
Difficulty: Easy
Source: Test bank
Type: Word
$2,892.33
Difficulty: Easy
Source: Test bank
Type: Word
$1,881.86
Difficulty: Easy
Source: Test bank
Type: Word
9.00%
Difficulty: Easy
Source: Test bank
Type: Word
182 days
Difficulty: Easy
Source: Test bank
Type: Word
182 days
Difficulty: Easy
Source: Test bank
Type: Word
6.50 months
Difficulty: Easy
Source: Test bank
Type: Word
104. What will be the maturity value in 15 months of a $4,500 loan at a simple interest rate of
11.9%?
$5,169.38
Difficulty: Easy
Source: Test bank
Type: Word
105. Cecille placed $17,000 in a 270-day term deposit earning 4.25%. How much will the bank pay
Cecille on the maturity date?
$17,534.45
Difficulty: Easy
Source: Test bank
Type: Word
106. What amount of interest will be earned on $1,500 invested for 18 months at an interest rate of
4%?
$90
Difficulty: Easy
Source: Test bank
Type: Word
107. How much will have to be deposited to earn $600 interest over two years at an interest rate of
3%?
$10,000
Difficulty: Easy
Source: Test bank
Type: Word
108. How many days will it take $2,500 to grow to $2,614.47 at an annual rate of 8.75%?
191 days
Difficulty: Easy
Source: Test bank
Type: Word
109. An investment earned $156.25 interest in 30 months. What was the simple annual rate of
interest?
2.5%
Difficulty: Easy
Source: Test bank
Type: Word
110. The interest earned on a $7,500 investment was $1181.25. What was the term in months if the
rate of interest was 3.5%?
54 months
Difficulty: Easy
Source: Test bank
Type: Word
111. What will be the maturity value of $3,300 invested at an interest rate of 2.75% in 15 months?
$3,408.90
Difficulty: Easy
Source: Test bank
Type: Word
112. Karen borrowed $2,000 at 10¼% on July 13. On what date would the amount owed first
exceed $2,100?
January 8
Difficulty: Medium
Source: Test bank
Type: Word
113. Calculate the missing values:
8.50%
Difficulty: Medium
Source: Test bank
Type: Word
September 30, 2014
Difficulty: Medium
Source: Test bank
Type: Word
September 18, 2013
Difficulty: Medium
Source: Test bank
Type: Word
116. On what date did a corporation borrow $350,000 at 7.5% from its bank if the debt was settled
by a payment of $356,041 on February 28?
December 6 of the previous year
Difficulty: Medium
Source: Test bank
Type: Word
117. Judith received the proceeds from an inheritance on March 25. She wants to set aside enough
on March 26 so that she will have $20,000 available on October 1 to purchase a car when the
new models are introduced. If the current interest rate on 181- to 270-day term deposits is
3.75%, what amount should she place in the term deposit?
$19,619.04
Difficulty: Medium
Source: Test bank
Type: Word
118. Village Finance Co. advanced three loans to Kamiko—$2,200 on June 23, $1,800 on August
5, and $1,300 on October 31. Simple interest at 7.25% was charged on all three loans, and all
were repaid on December 31 when some bonds that she owned matured. What total amount
was required to pay off the loans?
$5,412.13
Difficulty: Medium
Source: Test bank
Type: Word
119. Bruce borrowed $6,000 from Darryl on November 23. When Bruce repaid the loan, Darryl
charged $203.22 interest. If the rate of simple interest on the loan was 10.75%, on what date
did Bruce repay the loan? Assume that February has 28 days.
March 18
Difficulty: Medium
Source: Test bank
Type: Word
120. Sharon's $9,000 term deposit matured on March 16, 2014. Based on a simple interest rate of
3.75%, she received $110.96 in interest. On what date did she originally make the term
deposit?
November 17, 2013
Difficulty: Medium
Source: Test bank
Type: Word
121. The cash balance in Amalia's account with her stockbroker earns interest on the daily balance
at an annual rate of 4%. Accrued interest is credited to her account every six months—on
June 30 and December 31. As a result of the purchase and sale of securities from time to
time, the account's balance changed as follows:
Investment date Amount invested Interest rate M

What interest was credited to Amalia's account on June 30? The brokerage firm includes
interest for both January 1 and June 30 in the June 30 payment. Assume that February had 28
days.
$115.69
Difficulty: Medium
Source: Test bank
Type: Word
122. Dominion Contracting invested surplus funds in term deposits. All were chosen to mature on
April 1 when the firm intends to purchase a new grader.
What total amount will be available from the maturing term deposits on April 1 (of a leap
year)?
$235,423.32
Difficulty: Medium
Source: Test bank
Type: Word
123. Sam borrowed $1,250 on March 15 at an interest rate of 4.5%. Sam repaid the full amount
plus the interest owed on September 1. How much did Sam repay?
$1,273.29
Difficulty: Medium
Source: Test bank
Type: Word
124. Larissa earned $8.74 interest on $1,100 invested from January 11 to June 4. What annual rate
of simple interest did she earn?
2%
Difficulty: Medium
Source: Test bank
Type: Word
125. How much interest will an investment of $5,075 earn in two years at an interest rate of
2.25%?
$228.38
Difficulty: Medium
Source: Test bank
Type: Word
126. Sam earned $650 on an investment deposited at an interest rate of 3.25% for 30 months. How
much was the original investment?
$8,000
Difficulty: Medium
Source: Test bank
Type: Word
127. Marika deposited $2,100 on May 22. On September 10, she had $2,120.12. What simple
interest rate per year did she earn?
3.15%
Difficulty: Medium
Source: Test bank
Type: Word
128. What amount would have to be invested at a simple interest rate of 2.85% to grow to
$2,529.28 in 150 days?
$2,500
Difficulty: Medium
Source: Test bank
Type: Word
129. Kristina earned $33.70 at an interest rate of 2.5% from November 29 to April 1. What amount
did she invest? Assume that February has 28 days.
$4,000.16
Difficulty: Medium
Source: Test bank
Type: Word
130. Penny invested $4,500 on October 28 at a floating rate of interest that initially stood at 6.3%.
Effective December 2, the rate dropped by ½% and then it declined another ¼% effective
February 27. What total amount of principal plus interest will Penny receive when the
investment matures on March 15? Assume that the new year is a leap year.
$4,601.03
Difficulty: Hard
Source: Test bank
Type: Word
131. Marika earned $40.07 interest at 2.5% on $5,000 invested on April 7. On what date did her
investment mature?
Aug 2
Difficulty: Hard
Source: Test bank
Type: Word
4 months earlier
Difficulty: Easy
Source: Test bank
Type: Word
251 days earlier
Difficulty: Easy
Source: Test bank
Type: Word
45 days later
Difficulty: Easy
Source: Test bank
Type: Word
135. Determine a) whether the earlier or later payment has the greater economic value at the given
a) the later payment; b) 10.86%
Difficulty: Easy
Source: Test bank
Type: Word
a) the earlier payment; b) 5.84%
Difficulty: Easy
Source: Test bank
Type: Word
137. Two payments of $5,000 are to be received four and eight months from now.
a) What is the combined equivalent value of the two payments today if money can earn 6%?
b) If the rate of interest money can earn is 4%, what is the payments' combined equivalent
value today?
a) $9,709.65; b) $9,804.34
Difficulty: Easy
Source: Test bank
Type: Word
138. Three payments are scheduled as follows: $1,200 is due today, $900 is due in five months,
and $1,500 is due in eight months. The three payments are to be replaced by a single
equivalent payment due ten months from now. What should the payment be if money is worth
5.9%? Use ten months from now as the focal date.
$3,695.87
Difficulty: Medium
Source: Test bank
Type: Word
139. The first two of the following three payments were not made as scheduled. $1,200 was due
seven months ago, $900 was due two months ago, and $1,500 is due in one month. The three
payments are to be replaced by a single equivalent payment due three months from now.
What should the payment be if money is worth 9.9%? Use three months from now as the focal
date.
$3,760.88
Difficulty: Medium
Source: Test bank
Type: Word
a) the later payment; b) 1.03% per month
Difficulty: Easy
Source: Test bank
Type: Word
a) the earlier payment; b) 5.75%
Difficulty: Easy
Source: Test bank
Type: Word
142. What amount paid on September 24 is equivalent to $1,000 paid on the following December 1
if money can earn 3%?
$994.44
Difficulty: Easy
Source: Test bank
Type: Word
143. A $5,000 payment is scheduled for 120 days from now. If money can earn 7.25%, calculate
the payment's equivalent value at each of nine different dates: today and every 30 days for the
next 240 days.
$4,883.60 today, $4912.19 in 30 days, $4,941.11 in 60 days, $4,970.38 in 90 days, $5,000 in

120 days, $5,029.79 in 150 days, $5,059.59 in 180 days, $5,089.38 in 210 days, $5,119.18 in
240 days
Difficulty: Easy
Source: Test bank
Type: Word
144. A $3,000 payment is scheduled for 6 months from now. If money is worth 6.75%, calculate the
payment's equivalent values at two-month intervals beginning today and ending one year from
now.
$2,902.06 today, $2,933.99 in 2 months, $2,966.63 in 4 months, $3,000 in 6 months,

$3,033.75 in 8 months, $3,067.50 in 10 months, $3,101.25 in 12 months
Difficulty: Easy
Source: Test bank
Type: Word
145. Mr. and Mrs. Chan are considering two offers on a building lot that they own in a nearby town.
One is for $49,000, consisting of $10,000 down and the balance to be paid in a lump payment
in eight months. The second is for $50,000, with $10,000 down and the balance to be paid in 1
year. What rate of return must money earn for Mr. and Mrs. Chan to be indifferent between the
two offers?
7.69%
Difficulty: Medium
Source: Test bank
Type: Word
146. What interest rate must money earn for a payment of $1,389 on August 20 to be equivalent to
a payment of $1,348 on the previous March 29?
7.71%
Difficulty: Medium
Source: Test bank
Type: Word
147. Under what circumstance is $100 paid today equivalent to $110 paid 1 year from now?
If money can earn 10%, $100 paid today is equivalent to $110 paid 1 year from now.
Difficulty: Medium
Source: Test bank
Type: Concept
148. How can you determine whether two payments are equivalent to each other?
Calculate the future value of the earlier payment at the date of the later payment. If the future
value is equal to the later payment, the two payments are equal.
Difficulty: Medium
Source: Test bank
Type: Concept
149. What is meant by the "present value" of a payment that is scheduled for a future date?
The "present value" of the scheduled payment is the economically equivalent at an earlier
date.
Difficulty: Medium
Source: Test bank
Type: Concept
150. How can you determine which of three payments has the largest economic value?
Calculate the equivalent values of all three payments at the same focal date. The payment
with the highest equivalent value on that focal date is the one with the largest economic value.
Difficulty: Medium
Source: Test bank
Type: Concept
151. If the interest rate money can earn is revised upward, will a scheduled payment's present
value be higher or lower? Explain.
The payment's present value will be lower. Since the interest rate money can earn is larger,
less money needs to be invested today in order to grow to the specified amount of the
scheduled payment.
Difficulty: Medium
Source: Test bank
Type: Concept
152. What payment on August 19 is equivalent to a $1,000 payment on the preceding January 19, if
the rate of interest is 4.5%?
$970.87
Difficulty: Medium
Source: Test bank
Type: Word
153. A large retail store offers no payments, no interest for six months on all furniture and appliance
purchases exceeding $1,500. If money can earn 3.5%, how much should the store accept as a
payment today on furniture costing $1,850?
$1,818.18
Difficulty: Medium
Source: Test bank
Type: Word
154. Sam has won a lottery. He can take $5,000 now or $5,500 in one year. If money can earn 8%,
which option should he choose?
$5,500
Difficulty: Medium
Source: Test bank
Type: Word
155. A large retail store offers a payment plan of no interest with 50% down and the balance in six
months on a minimum purchase of $500. If money can earn 3.25%, how much of a discount
should a buyer receive on a purchase of $2,000 if paid in full at the time of purchase?
$16.25
Difficulty: Hard
Source: Test bank
Type: Word
156. If the interest rate money can earn is revised upward, is today's economic value of a stream of
future payments higher or lower? Explain.
Today's economic value is lower. This economic value is the lump amount today that is
equivalent to the payment stream. In other words, the lump along with its interest earnings
could pay the series of scheduled payments. (The last payment would reduce the remaining
funds to zero.) When the interest rates are higher, a smaller lump amount will be sufficient to
generate the payment stream because more interest will be earned to help meet the
payments.
Difficulty: Easy
Source: Test bank
Type: Concept
157. Calculate the equivalent value of the scheduled payments if money can earn the rate of return
specified in the last column. Assume that any payments due before today have been missed.
$6,369.85
Difficulty: Easy
Source: Test bank
Type: Word
158. What single payment, 45 days from now, is economically equivalent to the combination of
three payments of $1750 each: one due 75 days ago, the second due today, and the third due
in 75 days from now? Money is worth 9.9% per annum.
$5,314.19
Difficulty: Medium
Source: Test bank
Type: Word
159. Two payments of $2,000 each are to be received six and twelve months from now. If money is
worth 10%, what is the total equivalent value of the payments:
a) Today?
b) Six months from today?
c) Explain why the answer in part (b) is larger.
a) $3,722.94; b) $3,904.76; c) The equivalent value of a specified payment stream will be

greater at a later date than at an earlier date because of the time value of money.
Difficulty: Easy
Source: Test bank
Type: Word
160. Two payments of $3,000 each are due in 50 and 100 days. What is their combined economic
value today if money can earn:
a) 9%?
b) 11%?
c) Explain why the answer in part (b) is smaller.
a) $5,891.27; b) $35,867.70; c) The ability of money to earn a higher interest rate enables a
smaller amount to be economically equivalent to the specified payment stream.
Difficulty: Easy
Source: Test bank
Type: Word
161. Seth has a loan to repay. His terms are payments of $1,000 in six months and $1,000 in one
year. He wants to settle the debt in three months. If the rate of interest is 6.5%, what single
equivalent payment should Sam make?
$1,937.53
Difficulty: Medium
Source: Test bank
Type: Word
162. Ninety days ago Stella signed an agreement with Manon requiring her to make three
payments of $400 plus interest 90, 150, and 210 days, respectively, from the date of the
agreement. Each payment was to include interest on the $400 principal at the rate of 13.5%
from the date of the agreement. Stella now wants Ed to renegotiate the agreement and accept
a single payment 30 days from now, instead of the three scheduled payments. What payment
should Manon require in the new agreement if money is worth 8.5%?
$1,257.68
Difficulty: Medium
Source: Test bank
Type: Word
163. Which of the following two payment streams has the greater economic value today if money
can earn 3.5%: $500 now, $600 in three months, plus $900 in six months or $700 now, $300 in
three months, plus $1,000 in nine months?
$1,979.32 versus $1,972.40; therefore, option 1
Difficulty: Medium
Source: Test bank
Type: Word
164. The original $3,000 loan was advanced on March 1. The loan is to be repaid by the three
focal date.
$1,071.35
Difficulty: Medium
Source: Test bank
Type: Word
165. The original $3,000 loan was advanced on March 1. The loan is to be repaid by the three
focal date.
$876.21
Difficulty: Medium
Source: Test bank
Type: Word
166. A karate club offers two payment plans for a one-year membership. The first is a cash price of
$475. The second is a payment of $250 today, and $250 in six months. If the interest rate
charged by the club is 8%, which option has the greater economic value?
$475 versus $490.28; therefore, $475
Difficulty: Medium
Source: Test bank
Type: Word
167. A $10,000 loan made on January 1 at 7%, is to be repaid by payments of $3,500 on July 1,
$3,500 on October 1, and a final payment on January 1 of the next year. What is the amount
of the final payment required to pay off the loan in full?
$3523.45
Difficulty: Medium
Source: Test bank
Type: Word
168. Maurice borrowed $6,000 from Heidi on April 23 and agreed to make payments of $2,000 on
June 1 and $2,000 on August 1, and to pay the balance on October 1. If simple interest at the
rate of 10% was charged on the loan, what is the amount of the third payment?
$2,165.97
Difficulty: Medium
Source: Test bank
Type: Word
169. A loan of $10,000 is to be repaid by three payments of $2,500 due in two, four, and six
months, and a fourth payment due in eight months. What should be the size of the fourth
payment if an interest rate of 11% is charged on the loan? Use today as the focal date.
$2,966.44
Difficulty: Medium
Source: Test bank
Type: Word
170. A loan of $4,000 at 13% is to be repaid by three equal payments due four, six, and eight
months after the date on which the money was advanced. Calculate the amount of each
payment.
$1,419.61
Difficulty: Medium
Source: Test bank
Type: Word
171. A $6,000 loan at 8% is to be repaid in three equal payments at three months, six months, and
nine months. Determine the size of the equal payments.
$2,079.49
Difficulty: Medium
Source: Test bank
Type: Word
172. A $7,500 loan will be paid off by four equal payments to be made 2, 5, 9, and 12 months after
the date of the loan. What is the amount of each payment if the interest rate on the loan is
9.9%?
$1,981.53
Difficulty: Medium
Source: Test bank
Type: Word
173. $3,000 loan was advanced on March 1. The loan is to be repaid by the three indicated
payments. Calculate the unknown payment in each case. Use the loan date as the focal date.
$1,589.92
Difficulty: Medium
Source: Test bank
Type: Word
174. Kris has borrowed $2,000 and has agreed to repay the loan in two payments in nine and
fifteen months. Each payment is $1,000 of principal and interest at the rate of 7%. Kris wants
to settle the debt in six months. What single equivalent payment should she make if money is
now worth 5%?
$2087.70
Difficulty: Hard
Source: Test bank
Type: Word
175. A $5,000 loan made on March 15 at an interest rate of 7.5%, is to be repaid by payments of
$2,000 on June 15, $2,000 on October 15, and a final payment on December 15. What is the
amount of the final payment required to pay off the loan in full?
$1,018.77
Difficulty: Hard
Source: Test bank
Type: Word
176. An $8,000 loan at an interest rate of 6.5% is to be repaid in three equal payments at six
months, nine months, and one year later. Determine the size of the equal payments.
$2,796.22
Difficulty: Hard
Source: Test bank
Type: Word
177. Calculate the size of the equal payments. Use the loan date as the focal date.
$2,741.67
Difficulty: Hard
Source: Test bank
Type: Word
178. How much interest will be earned on $8,000 over a period of four months if the interest rate is
6.5%?
A. $7,830.34
B. $173.33
C. $169.66
D. $130.00
E. $26.00
Accessibility: Keyboard Navigation
Difficulty: Easy
Source: Test bank
Type: Multiple Choice
179. How much must be placed in a two-month term deposit earning 4.8% in order to earn $275
interest?
A. $12,500.00
B. $5,729.17
C. $23,333.33
D. $34,375.00
E. $53,333.33
Difficulty: Easy
Source: Test bank
180. In how many months will $6,000 earn interest of $2,700 at 15%?
A. 3 months
B. 36 months
C. 4 months
D. 60 months
E. 1 month
Difficulty: Easy
Source: Test bank
181. A principal of $2,680 is invested for 2.5 years at a rate of 12%. What amount of interest will be
earned?
A. $321.60
B. $3,001.60
C. $3,484.00
D. $290.33
E. $804.00
Difficulty: Easy
Source: Test bank
182. A deposit of $659 earns $15.10 interest at a rate of 4.5%. For how many days was this money
on deposit?
A. 186
B. 51
C. 183
D. 191
E. 190
Difficulty: Easy
Source: Test bank
183. A $10,000 90-day term deposit earns 4.5% interest. How much will the depositor have at
maturity?
A. $11,825.00
B. $10,110.96
C. $10,112.50
D. $112.50
E. $110.96
Difficulty: Easy
Source: Test bank
184. A principal of $790 grew to $1,000 in 14 months. What annual rate of simple interest was
earned?
A. 1.89%
B. 15.23%
C. 9.67%
D. 18.00%
E. 22.78%
Difficulty: Easy
Source: Test bank
185. What principal will grow to $12,031.25 at 7.5% interest in 15 months?
A. $10,000.00
B. $11,000.00
C. $15,000.00
D. $20,000.00
E. $21,000.00
Difficulty: Easy
Source: Test bank
186. If $450,000 is invested on June 3 at 7.75%, what will be the value of the investment on
December 11?
A. $468,250
B. $466,625
C. $632,497
D. $432,461
E. $484,875
Difficulty: Easy
Source: Test bank
187. A 9-month term deposit, earning interest at 7%, was worth $72,559 when it reached maturity
today. How much had been invested at the beginning of the term?
A. $76,368
B. $68,940
C. $72,552
D. $67,480
E. $70,000
Difficulty: Easy
Source: Test bank
188. Determine the amount of (simple) interest that would be earned over eight months at 26% on
an investment of $43,500.
A. $11,309.99
B. $2,352.48
C. $7,540.00
D. $6,786.00
E. $5,367.03
Difficulty: Easy
Source: Test bank
189. How many days would it take for an investment of $9,000 to grow to $10,000 at 17%?
A. 214
B. 239
C. 126
D. 53
E. 66
Difficulty: Easy
Source: Test bank
190. Calculate the amount of interest that would be earned on an account of $47,500 if it earned
6.4% for 293 days.
A. $89,072
B. $3,040
C. $2,440
D. $17,442
E. $11,298
Difficulty: Easy
Source: Test bank
191. Calculate the amount of interest that would be earned on an account of $59,500 at 7.2% for
133 days.
A. $4,284
B. $1,561
C. $1,013
D. $2,229
E. $3,771
Difficulty: Easy
Source: Test bank
5.15% for 27 days.
A. $11,298
B. $11,124
C. $823
D. $1,744
E. $2,110
Difficulty: Easy
Source: Test bank
4.95% for 37 days.
A. $17,028
B. $11,124
C. $991
D. $1,726
E. $2,110
Difficulty: Easy
Source: Test bank
194. How much interest could you earn over 7 months on an investment of $49,000 at 14.75%?
A. $28,583
B. $422
C. $5,059
D. $508
E. $4216
Difficulty: Easy
Source: Test bank
195. How much interest could you earn, over 5 months on an investment of $94,000 at 17.75%?
A. $39,167
B. $6,952
C. $8,342
D. $993
E. $4,216
Difficulty: Easy
Source: Test bank
196. How much interest could you earn over 2 months on an investment of $82,500 at 23.5%?
A. $3,231
B. $9,694
C. $6,942
D. $714
E. $4,216
Difficulty: Easy
Source: Test bank
197. After how many days will a loan of $888 at 15% amount to $1554 (including accrued
interest)?
A. 1825 days
B. 365 days
C. 100 days
D. 2,025 days
E. 525 days
Difficulty: Easy
Source: Test bank
198. Calculate the maturity value of an investment of $22,500 after 9 months at 13.45%.
A. $20,438.29
B. $4,736.25
C. $2,269.69
D. $27,236.25
E. $24,769.69
Difficulty: Easy
Source: Test bank
199. Calculate the maturity value of a loan of $6,875 after 239 days at 18.3%.
A. $7,698.81
B. $7,991.81
C. $6,051.19
D. $8,238.13
E. $8,769.81
Difficulty: Easy
Source: Test bank
200. Robert placed $7,000 in a 10-month term deposit paying 6.25%. How much will the term
deposit be worth when it matures?
A. $3,645.83
B. $7,991.81
C. $7,364.58
D. $6,653.46
E. $7,769.89
Difficulty: Easy
Source: Test bank
201. After 7 months how much interest would I have to pay on a loan of $300 if the rate of interest
was 32%?
A. $96.00
B. $47.50
C. $36.67
D. $56.00
E. $69.74
Difficulty: Easy
Source: Test bank
202. How much money would one have to invest today at 18.75% in order to have a total of
$20,000 in 9 months?
A. $16,250
B. $23,750
C. $22,813
D. $17,534
E. $19,122
Difficulty: Easy
Source: Test bank
203. How long will it take to earn $542.40 interest on an investment of $6,400 at 11.3%?
A. 7.5 months
B. 8.0 months
C. 8.5 months
D. 9.0 months
E. 9.5 months
Difficulty: Easy
Source: Test bank
204. What simple annual interest rate would you need to earn $2,000 interest in 147 days on an
investment of $49,000?
A. 19.33%
B. 40.82%
C. 10.13%
D. 21.44%
E. 7.85%
Difficulty: Easy
Source: Test bank
205. After 4 months how much interest would I have to pay on a loan of $500 if the rate of interest
was 22%?
A. $11.25
B. $27.50
C. $36.67
D. $110.00
E. $39.74
Difficulty: Easy
Source: Test bank
206. If $59,200 grows to $60,000 in 41 days what simple annual interest rate was earned?
A. 12.03%
B. 11.87%
C. 13.51%
D. 17.48%
E. 10.16%
Difficulty: Easy
Source: Test bank
207. Calculate the amount of money that would have to be invested at 8.5% to earn monthly
interest of $3,000?
A. $255,000
B. $352,941
C. $355,491
D. $423,529
E. $521.449
Difficulty: Easy
Source: Test bank
208. How much interest would one earn over 200 days on an investment of $95,000 at an interest
rate of 14%?
A. $1,023
B. $5,889
C. $7,021
D. $7,288
E. $13,300
Difficulty: Easy
Source: Test bank
209. How long will it take for an investment of $9,000 at 3.75% to earn interest of $250?
A. 74 days
B. 163 days
C. 218 days
D. 270 days
E. 741 days
Difficulty: Easy
Source: Test bank
210. On March 14 Lisa invested in a 200-day term deposit. On what date will it mature?
A. January 16
B. March 23
C. August 24
D. September 30
E. November 7
Difficulty: Easy
Source: Test bank
211. How many days will it take for an investment of $5,500 to earn $602.74 interest at 16%?
A. 68
B. 22
C. 230
D. 250
E. 4564
Difficulty: Medium
Source: Test bank
212. Fred puts $5,475 into a term deposit on May 15th. The deposit earns a simple interest rate of
4%. If the term deposit will mature on August 14th, how much interest will Fred earn?
A. $35.40
B. $24.80
C. $36.00
D. $36.60
E. $54.60
Difficulty: Medium
Source: Test bank
213. John borrowed $1500 at 9.5% on October 10, 2004. On what date did the amount owed first
exceed $1565?
A. March 19, 2005

B. March 23, 2005
C. March 26, 2005
D. March 30, 2005
E. March 17, 2005
Difficulty: Medium
Source: Test bank
214. Morton purchased a 165-day Guaranteed Investment Certificate on October 11. On what date
will it mature?
A. January 11 of the following year.

B. March 25 of the following year.
C. May 5 of the following year.
D. July 3 of the following year.
E. October 11 of the following year.
Difficulty: Medium
Source: Test bank
215. What was the simple interest rate if an investment of $35,000 earned interest of $250 between
April 4 and May 23?
A. 2.66%
B. 5.32%
C. 7.14%
D. 8.00%
E. 9.89%
Difficulty: Medium
Source: Test bank
216. What annual simple interest rate would be needed for $55,000 to grow to $60,000 over a term
of 295 days?
A. 12.34%
B. 10.31%
C. 11.25%
D. 9.09%
E. 8.33%
Difficulty: Medium
Source: Test bank
217. How much money would I have to invest at 6 ½% to earn interest of $4,500 per month?
A. $830,769
B. $692,308
C. $462,963
D. $777,667
E. $103,772
Difficulty: Medium
Source: Test bank
218. How much money would I have to invest at 9 ½% to earn interest of $9,200 per month?
A. $1,830,769
B. $2,306,224
C. $1,162,105
D. $5,777,667
E. $1,903,772
Difficulty: Medium
Source: Test bank
219. How many months would it take to earn $1,650 on a deposit of $44,000 at 7 ½%?
A. 4.5 months
B. 12 months
C. 6 months
D. 5 months
E. ½ month
Difficulty: Medium
Source: Test bank
220. How many months would it take to earn $3,570 on a deposit of $84,000 earning 8 ½%?
A. 7.5 months
B. 12 months
C. ¾ month
D. 9 months
E. 6 months
Difficulty: Medium
Source: Test bank
221. How many months would it take to earn $3,300 on a deposit of $84,000 at 9 ½%?
A. 4.14 months
B. 4.96 months
C. 11.2 months
D. 15.3 months
E. 25.4 months
Difficulty: Medium
Source: Test bank
222. Calculate the simple interest rate at which one can earn $1,500 per day interest on an
investment of $7,500,000.
A. 2.00%
B. 9.67%
C. 5.00%
D. 6.67%
E. 7.30%
Difficulty: Medium
Source: Test bank
223. Calculate the simple interest rate at which one can earn $2,200 per day interest on an
A. 9.45%
B. 25.86%
C. 3.86%
D. 13.61%
E. 7.30%
Difficulty: Medium
Source: Test bank
224. Calculate the simple interest rate at which one can earn $500 per day interest on an
A. 9.45%
B. 28.00%
C. 10.14%
D. 12.91%
E. 25.30%
Difficulty: Medium
Source: Test bank
225. What simple interest rate was used if Rocco charged Squirrel $350 interest on a loan of
$2,000 for 41 days?
A. 70%
B. 156%
C. 14.35%
D. 15.58%
E. 175%
Difficulty: Medium
Source: Test bank
226. What simple interest rate was used if Eddie charged Meatball $700 interest on a loan of
$5,000 for 26 days?
A. 217%
B. 156%
C. 14%
D. 88%
E. 197%
Difficulty: Medium
Source: Test bank
227. How long would it take for a $25,000 investment to earn $2,000 interest at 13.5%?
A. 271 days
B. 125 days
C. 59 days
D. 217 days
E. 169 days
Difficulty: Medium
Source: Test bank
228. How long would it take for a $45,000 investment to earn $6,000 interest at 17.5%?
A. 115 days
B. 77 days
C. 95 days
D. 377 days
E. 278 days
Difficulty: Medium
Source: Test bank
229. Cindy borrowed $750 from Clare on April 17 at an interest rate of 15%. On June 30 of the
same year, Clare repaid the loan with interest. How much interest should she have paid?
A. $22.81
B. $21.63
C. $28.13
D. $112.50
E. $90.87
Difficulty: Medium
Source: Test bank
230. Ethel invested $3,450 of Fred's money on February 3. Lucy had promised Ethel that the
investment would earn an interest rate of 55%. On February 27 of the same year, Ethel
cashed in her investment and received the interest as Lucy had promised. How much interest
had she earned?
A. $124.77
B. $189.75
C. $218.63
D. $64.98
E. $90.87
Difficulty: Medium
Source: Test bank
231. Carly borrowed $2,500 from Clare on July 18 at an interest rate of 8%. On March 7 of the
A. $72.88
B. $21.63
C. $127.12
D. $112.50
E. $90.87
Difficulty: Medium
Source: Test bank
232. Carly borrowed $450 from Jenn on August 24 at an interest rate of 11%. On January 11 of the
A. $22.81
B. $12.38
C. $21.63
D. $18.99
E. $90.87
Difficulty: Medium
Source: Test bank
233. How much money would have to be invested from June 4 until December 22 at 13%, in order
to earn $750 in interest?
A. $12,840
B. $5,769
C. $2,186
D. $10,477
E. $5,151
Difficulty: Medium
Source: Test bank
234. How much money would have to be invested from December 22 until June 4 at 12% in order
to earn $750 in interest?
A. $12,840
B. $13,910
C. $6,250
D. $10,477
E. $15,151
Difficulty: Medium
Source: Test bank
235. How much money would have to be invested from November 22 until June 29 of the following
year at 19%, in order to earn $950 in interest?
A. $8,333
B. $12,500
C. $5,000
D. $11,351
E. $6,306
Difficulty: Medium
Source: Test bank
236. If $20,000 was invested 82 days ago at an interest rate of 13.75%, what would be the value of
the investment today?
A. $19,401
B. $20,618
C. $22,750
D. $20,000
E. $26,306
Difficulty: Medium
Source: Test bank
237. If, on March 11, $12,000 was placed in an investment earning an interest rate of 16%, on what
day will the amount of interest earned reach $1,000?
A. Jul. 10
B. Jan.19
C. Apr. 13
D. Nov. 1
E. Sept. 18
Difficulty: Medium
Source: Test bank
238. Seven months ago Julie received some money for her birthday and she immediately deposited
it into an account earning 6.5%. Today the value of that deposit has reached $4,259.88. How
much did she deposit 7 months ago?
A. $1,556.20
B. $4,104.26
C. $4,098.36
D. $3,982.99
E. $2,646.45
Difficulty: Medium
Source: Test bank
239. How much money would have to be deposited on March 11 into an account earning a simple
interest rate of 9.5% if the goal is to have the deposit grow to $12,000 by November 1?
A. $10,860.00
B. $11,175.45
C. $14,098.36
D. $11,308.33
E. $11,497.44
Difficulty: Medium
Source: Test bank
240. At what simple annual interest rate would $835 grow to $900 in 5 months?
A. 16.7%
B. 4.5%
C. 7.8%
D. 18.7%
E. 17.3%
Difficulty: Medium
Source: Test bank
241. At what simple annual interest rate would $1,896 grow to $2,000 in 300 days?
A. 6.7%
B. 8.5%
C. 7.8%
D. 5.5%
E. 6.3%
Difficulty: Medium
Source: Test bank
242. An investment of $ 19,250 grew to $20,000 between March 26 and October 10. What simple
annual interest rate did the investment earn?
A. 3.9%
B. 8.5%
C. 6.9%
D. 5.5%
E. 7.2%
Difficulty: Medium
Source: Test bank
243. How many months would it take for $3,500 to grow to $4,000 at 15%?
A. 9.5
B. 11.4
C. 348
D. 10.0
E. 6.6
Difficulty: Medium
Source: Test bank
244. How many days would it take for $9,500 to grow to $10,000 at 7%?
A. 75
B. 188
C. 261
D. 365
E. 275
Difficulty: Medium
Source: Test bank
245. On what day will the amount of interest earned reach $5,000 if $250,000 was invested at an
interest rate of 11% on June 23?
A. Mar. 8
B. Jul. 10
C. Aug. 29
D. Nov. 1
E. Dec. 18
Difficulty: Hard
Source: Test bank
246. On April 3 Artie invested $75,000 and by October 27 he had earned interest of $10,500. What
simple interest rate had he earned?
A. 86.00%
B. 32.34%
C. 71.42%
D. 14.00%
E. 24.69%
Difficulty: Hard
Source: Test bank
247. Dalton loaned $550,000 to Doc Holliday on August 24. On February 8 of the following year,
Doc paid to Dalton the $65,000 interest that had accumulated on the debt up to that time.
What simple rate of interest was Dalton charging on this loan?
A. 21.90%
B. 25.68%
C. 21.79%
D. 74.32%
E. 24.69%
Difficulty: Hard
Source: Test bank
248. Albert loaned $850,000 to Batman on March 17. On January 9 of the following year, Batman
paid to Albert the $49,000 of interest that had accumulated on the debt up to that time. What
simple rate of interest was Albert charging on this loan?
A. 7.06%
B. 25.68%
C. 31.40%
D. 9.65%
E. 17.34%
Difficulty: Hard
Source: Test bank
249. On September 4 Fred made a $25,000 loan to Ricky for an investment that was guaranteed to
earn an interest rate of 40%. On March 11 of the following year, Ricky cashed in his
investment and received the interest as had been promised. How much interest had he
earned?
A. $2,965
B. $5,151
C. $2,186
D. $4,849
E. $16,083
Difficulty: Hard
Source: Test bank
250. On December 19 Jerry's $800 deposit matured at $848.22. It had been earning 8%. What was
the date that he made the deposit?
A. Oct. 2
B. Jan. 1
C. Mar. 19
D. Sept. 20
E. Apr. 1
Difficulty: Hard
Source: Test bank
251. Barkley's Bookkeeper is accounting for a cheque that was written for $29,674. It represents full
payment of principal plus interest for a loan that was taken out for 128 days at 8.5%. How
much of the $ 29,674 was interest?
A. $2,881.51
B. $884.52
C. $1,768.33
D. $858.93
E. $726.98
Difficulty: Hard
Source: Test bank
252. If the maturity value of an investment which paid 13.9% was $400,000 after 7 months, how
much of that amount was interest?
A. $30,001
B. $55,600
C. $32,433
D. $67,888
E. $27,999
Difficulty: Hard
Source: Test bank
253. Grandma Jones has $300,000 in a bank account, which pays her interest at 3%. What is the
largest amount of money that she could take out now and still leave enough in the account so
that she can earn $600 per month in interest?
A. $60,000
B. $100,000
C. $280,000
D. $240,000
E. $9,000
Difficulty: Hard
Source: Test bank
254. Grandpa Smith has $200,000 in a bank account, which pays him interest at 4%. What is the
largest amount of money that he could take out now and still leave enough in the account so
that he can earn $500 per month in interest?
A. $60,000
B. $50,000
C. $120,000
D. $150,000
E. $30,000
Difficulty: Hard
Source: Test bank
255. After 7 months at an interest rate of 13%, an investment matured today at a value of $80,000.
How much of the $80,000 is interest?
A. $12,065
B. $10,400
C. $6,067
D. $7,436
E. $5,639
Difficulty: Hard
Source: Test bank
256. On May 27, Kristina made an investment that earned an interest rate of 9.4%. By November 6
the investment's value had increased to $77,000. What amount of interest had Kristina
earned?
A. $3,619
B. $3,102
C. $3,232
D. $5,112
E. $7,238
Difficulty: Hard
Source: Test bank
257. Susan wants a 120-day extension on a payment of $2,000. If she and her creditor agree that
money can now earn 6%, what amount should she pay at the later date?
A. $1,961.31
B. $2,038.69
C. $2,079.95
D. $2,039.45
E. $2,080.55
Difficulty: Easy
Source: Test bank
258. Ace Furniture will give you 8 months, interest free, before you have to pay for a $2,000 sofa.
Based on the fact that Ace pays 14% on its short term debt, what would be a reasonable
amount of cash for you to offer them at the time of purchase?
A. $2,187
B. $1,829
C. $1,720
D. $1,813
E. $2,000
Difficulty: Medium
Source: Test bank
259. If you pay your $3,000 tuition 3 months before it is due, the local college will give you a $250
"scholarship" reducing your tuition payment to $2,750. What is the annual simple interest rate
to which this incentive is equal?
A. 36.4%
B. 9.1%
C. 8.3%
D. 33.3%
E. 27.3%
Difficulty: Medium
Source: Test bank
260. If money is worth 14 %, what payment on August 29 would be equal in value to a payment of
$86,900 due on January 31 of the following year?
A. $74,734
B. $92,066
C. $81,734
D. $76,519
E. $82,024
Difficulty: Medium
Source: Test bank
261. What payment 5 months from now would be equivalent in value to a $4,000 payment due
today and a $3,000 payment due 7 months from now? Money can earn 6.5%.
A. $7,455.01
B. $6,923.82
C. $7,189.58
D. $7,076.18
E. $6,544.98
Difficulty: Medium
Source: Test bank
262. Payments of $100,000 and $150,000 are due to be paid in 45 days and 75 days respectively.
If money is worth 7.3%, what is the combined economic value today of the two payments?
A. $574,734
B. $246,891
C. $249,452
D. $276,519
E. $229,567
Difficulty: Medium
Source: Test bank
263. Patrick has a contract that will pay him $3,500 in 11 months. If money can earn 15%, what will
be the value of that contract three months from now?
A. $2,975
B. $3,077
C. $3,150
D. $3,182
E. $3,355
Difficulty: Medium
Source: Test bank
264. Mike is supposed to pay $750 to Sarah, but wishes to delay it for 48 days. Determine the
amount Sarah should expect in 48 days if the rate of interest is 6.55%
A. $756.46
B. $765.66
C. $771.55
D. $793.12
E. $795.61
Difficulty: Medium
Source: Test bank
265. David is supposed to pay $975 to Mark, but wishes to delay it for 6 months. Determine the
amount Mark should expect in 6 months if the rate of interest is 4.75%
A. $992.68
B. $998.16
C. $1,002.45
D. $1,007.67
E. $1,012.37
Difficulty: Medium
Source: Test bank
266. Michaela is supposed to pay $15,000 to Mahmoud, but due to financial constraints, has to be
delayed by on quarter. Determine the future amount if the rate of interest is 11.45%
A. $14,618.43
B. $14,727.31
C. $15,429.38
D. $15,631.42
E. $17,727.66
Difficulty: Medium
Source: Test bank
267. If $4,000 is to be paid now. What amount would be equivalent 97 days earlier given an interest
A. $3,955.33
B. $3,844.22
C. $3,733.11
D. $3,622.00
E. $4,421.67
Difficulty: Medium
Source: Test bank
268. If $7,500 is to be paid now, what amount would be equivalent 8 months earlier given an
interest rate of 3.88% per year?
A. $7,621.85
B. $7,310.89
C. $6,822.14
D. $6,219.65
E. $7,210.33
Difficulty: Medium
Source: Test bank
269. $180 is to be paid now. What amount would be equivalent 3 quarters earlier given an interest
A. $184.33
B. $212.14
C. $171.27
D. $166.81
E. $191.54
Difficulty: Medium
Source: Test bank
270. John can purchase an airline ticket for $540 now or can pay $578 in 90 days. If interest is
6.6%, determine whether John should purchase the ticket now or in 90 days.
A. Buy now - savings of $28.74

B. Buy now - savings of $34.22
C. No difference between the two options
Difficulty: Medium
Source: Test bank
271. Alain can purchase an airline ticket for $500 now or can pay $525 in 3 months. If interest is
2.5%, determine whether Alain should purchase the ticket now or in 3 months.

Difficulty: Medium
Source: Test bank
272. A department store is offering a washer/dryer for $1480 now or can pay $1500 in 120 days. If
interest is 8.52%, determine whether a customer should purchase now or in 120 days.

Difficulty: Medium
Source: Test bank
273. A department store is offering a television for $720 now or can pay $725 in 90 days. If interest
is 10%, determine whether a customer should purchase now or in 90 days.

Difficulty: Medium
Source: Test bank
274. If money if worth $650 now and $675 in 3 months, determine the rate of return that an investor
A. 15.38%
B. 14.22%
C. 13.85%
D. 12.52%
E. 10.60%
Difficulty: Medium
Source: Test bank
275. If money if worth $985 now and $1005 in two months, determine the rate of return that an
A. 15.41%
B. 14.62%
C. 13.83%
D. 12.18%
E. 13.44%
Difficulty: Medium
Source: Test bank
276. If money if worth $1,150 now and $1,205 in 240 days, determine the rate of return that an
A. 9.15%
B. 8.38%
C. 8.41%
D. 7.50%
E. 7.27%
Difficulty: Medium
Source: Test bank
277. If money if worth $1,500 now and $1,540 in 90 days, determine the rate of return that an
A. 12.45%
B. 11.23%
C. 10.81%
D. 9.63%
E. 8.85%
Difficulty: Medium
Source: Test bank
278. Compare the economic values of two options given an annual rate of 6.6%. Option 1 - $900 in
90 days and $1,200 in 120 days. Option 2 - $850 in 240 days and $1,390 in 320 days. Given
the following information, choose the best option.

Difficulty: Medium
Source: Test bank
279. Compare the economic values of two options given an annual rate of 8.5%. Option 1 - $900 in
60 days and $1,200 in 180 days. Option 2 - $925 in 90 days and $1,050 in 120 days. Given

Difficulty: Medium
Source: Test bank
280. Compare the economic values of two options given an annual rate of 9.25%. Option 1 - $900
in 5 months and $400 in 9 months. Option 2 - $550 in 7 months and $825 in 10 months. Given

Difficulty: Medium
Source: Test bank
281. Compare the economic values of two options given an annual rate of 4.5%. Option 1 - $1,100
in 1 month and $850 in 3 months. Option 2 - $1,050 in 6 months and $925 in 9 months. Given

Difficulty: Medium
Source: Test bank
282. Payments of $6,000 six months ago and $3,000 one month ago are to be replaced by $5,000
in 9 months and another payment today. If interest is 4.2% annually, determine the price of the
payment today.
A. $4,289.19
B. $4,372.66
C. $5,433.80
D. $5,526.32
E. $7,428.37
Difficulty: Medium
Source: Test bank
283. Payments of $7,000 120 days ago and $3,000 90 days ago are to be replaced by $4,500 60
days from now and a final payment 240 days from now. If interest is 5.95% annually,
determine the value of the final payment.
A. $4,851.61
B. $4,926.86
C. $5,424.38
D. $5,727.60
E. $5,940.14
Difficulty: Medium
Source: Test bank
284. Two payments of $5,000 60 days ago and $5,000 in 120 days are to be replaced by a
payment now and $4,000 in 90 days. If interest is 3.2% annually, determine the amount to pay
now, if the focal point is today.
A. $6,012.40
B. $6,018.50
C. $6,005.57
D. $6,003.20
E. $5,996.60
Difficulty: Medium
Source: Test bank
285. Payments of $2,500 due now and $6,500 due in 90 days are to be replaced by a $4,000
payment due in 120 days and a final payment due in 180 days from now. If interest is 5.5%
annually, determine the value of the final payment if the focal point is 180 days from now.
A. $5,220.67
B. $5,207.38
C. $5,163.45
D. $5,119.80
E. $5,087.63
Difficulty: Medium
Source: Test bank
286. Two payments of $1,000 now and $3,000 in 6 months are to be replaced by $2,500 in 4
months and another in 9 months. If the rate of interest is 6.3% annually, determine the value of
the final payment in 9 months if the focal point is in 9 months.
A. $1,532.67
B. $1,528.875
C. $1,502.65
D. $1,498.13
E. $1,486.86
Difficulty: Medium
Source: Test bank
287. Two payments of $8,000 in 60 days and $5,000 in 90 days are to be replaced by a payment
now and another payment of $2,500 in 30 days. If interest is 7.3% annually, determine the
value of the payment now.
A. $10,658.12
B. $10,522.44
C. $10,485.31
D. $10,331.64
E. $10,280.48
Difficulty: Medium
Source: Test bank
288. $8,000 due now is to be replaced by three equal payments in 2, 6 and 9 months from today. If
interest is 6.75% annually, determine the value of the payments.
A. $2,145.62
B. $2,381.06
C. $2,573.25
D. $2.648.67
E. $2,750.99
Difficulty: Medium
Source: Test bank
289. A loan of $1,580 bearing interest at 15% is due nine months from now. What single payment
three months before the loan is due will put the lender in the same financial position as the
scheduled payment at maturity? Assume that money can earn 12%.
A. $1,658.25
B. $1,533.98
C. $1,706.55
D. $1,490.57
E. $1,642.38
Difficulty: Medium
Source: Test bank
290. Payments of $700 due three months ago and $1,000 six months from now are to be replaced
by one equivalent payment four months from now. What is the size of this payment if money
can earn 7%?
A. $1,661.01
B. $1,700.72
C. $1,708.72
D. $1,717.05
E. $1,740.25
Difficulty: Medium
Source: Test bank
291. Payments of $1,400 and $2,500 were due 90 days ago and 120 days ago, respectively. What
is the combined economic value today of these payments if money can earn 9%?
A. $3,943.58
B. $3,859.22
C. $4,005.04
D. $4,111.11
E. $3,797.76
Difficulty: Medium
Source: Test bank
292. $12,000 due today is to be replaced by three equal payments in 30, 60 and 90 days from
today. If interest is 8.4% annually, determine the value of the payments. Use a focal date of
today.
A. $4,055.87
B. $4,165.26
C. $4,276.65
D. $4,387.42
E. $4,598.57
Difficulty: Medium
Source: Test bank
293. $22,000 was due 90 days ago. It is now to be repaid in three equal payments in 30, 60 and
180 days from now. If interest is 5.92% annually, determine the value if the focal date is today.
A. $8,627.35
B. $7,935.12
C. $7,727.54
D. $7,549.67
E. $7,182.67
Difficulty: Medium
Source: Test bank
294. $7,500 was due 3 months ago. It is now to be repaid in three equal payments in 4, 8 and 10
months from now. If interest is 3.85% annually, determine the value if the focal date is in 4
months.
A. $2,583.98
B. $2,678.32
C. $2,781.42
D. $2,934.55
E. $3,122.68
Difficulty: Medium
Source: Test bank
295. An $18,000 payment due in 300 days is to be replaced by three equal payments now, in 150
days and 250 days. Determine the value of the payments if interest is 10.2% annually, and the
focal point is now.
A. $6,142.51
B. $5,913.75
C. $5,823.89
D. $5,738.38
E. $5,421.03
Difficulty: Medium
Source: Test bank
296. Mike borrowed $6,000 on August 15 at a rate of 9.3% annually. Two payments of $2,000 were
made on September 1 and November 1 to reduce the loan. What amount should be paid on
December 15 to pay off the loan?
A. $3,861.05
B. $2,110.58
C. $4, 258.23
D. $5, 815.01
E. $6,005.37
Difficulty: Medium
Source: Test bank
297. Two debt payments of $2,000 each are due now and nine months from now. If money is worth
8%, what single payment six months from now is required to settle the debt?
A. $4,042.34
B. $7,177.27
C. $6,127.48
D. $3,600.00
E. $4,040.78
Difficulty: Medium
Source: Test bank
298. What single payment one year from now will satisfy two obligations: $4,000 due today and
$6,000 due 18 months from now? Assume that money can earn 14%.
A. $5,083.74
B. $5,000.00
C. $10,980.00
D. $10,167.48
E. $5,490.00
Difficulty: Medium
Source: Test bank
299. A $3,000 obligation due eight months from now is settled by two equal payments, one five
months from now and the other nine months from now. If money can earn interest at 16%,
what is the size of each payment? Use a focal date five months from now.
A. $3,038.46
B. $1,723.64
C. $861.82
D. $1,479.77
E. $2,959.54
Difficulty: Hard
Source: Test bank
300. Frankie's Furniture Mart has contracts from one customer who will pay $4,695 in 5 months and
another customer who will pay $7,830 in 7 months. Frankie can sell the contracts today to
Vinnie's finance company at a discount rate of 23.5%. How much money will Vinnie pay to
Frankie today for the two contracts?
A. $11,162
B. $11,208
C. $12,525
D. $13,705
E. $14,058
Difficulty: Hard
Source: Test bank
301. A payment of $590 is now 93 days overdue. A second payment of $955 will be due and
payable in 200 days. If money can earn an interest rate of 11%, what single amount, paid in 30
days, will be an equivalent replacement payment?
A. $1,507
B. $1,520
C. $1,545
D. $1,629
E. $1,783
Difficulty: Hard
Source: Test bank
302. A contract was signed eight months ago requiring the payment of $13,000 plus interest at 8%
after one year. What two equal payments made today and four months from today are
equivalent to the original contract? Assume that money is now worth 5%. Use four months
from today as the focal date.
A. $7,020.00
B. $7,070.11
C. $6,446.28
D. $13,809.84
E. $7,078.02
Difficulty: Hard
Source: Test bank
CHAPTER 6 Summary
Category # of Questions
Accessibility: Keyboard Navigation 125
Difficulty: Easy 103
Difficulty: Hard 44
Difficulty: Medium 155
Jerome - Chapter 06 302
Learning Objective: 06- 165
01 Calculate interest; rate; term; maturity value (future value); and present value in a simple interest environment
Learning Objective: 06- 101
02 Calculate the equivalent value on any date of a single payment or a stream of payments
Learning Objective: 06-03 Present details of the amount and timing of payments in a time diagram 95
Source: Student text 94
Source: Test bank 208
Topic: Simple Interest 302
Type: Concept 11
Type: Multiple Choice 125
Type: Word 166
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craft of war; and hath not the Prophet himself said, What is war but a
game of deception?’[497] ‘That is true,’ responded Aly, ‘but I will have
none of the aid that cometh from Muâvia.’ ‘Then,’ said Ibn Abbâs,
‘thou hadst better depart to thy property at Yenbó, and close the
gates of thy stronghold behind thee; for everywhere the Bedouins
are hounding along; and if thou makest the rest of the people thine
enemies, these will find thee alone, and will surely lay the blood of
Othmân at thy door.’ ‘Come,’ said Aly, trying another line, ‘thou shalt
go forth thyself to Syria. See, now, I have appointed thee.’ ‘That,’
replied Ibn Abbâs, ‘can never be. Muâvia would surely behead me or
cast me into prison because of Othmân’s death, and my being akin
to thee. Hearken to me, and make terms with him ere it be too late.’
But Aly turned a deaf ear to his appeal.[498] .
Acting on these wayward impulses, Aly
sent men of his own to replace the existing Aly appoints new governors
governors in the chief commands throughout the empire.
Moharram, a.h. XXXVI. July,
throughout the empire. In most places they a.d. 656.
met with but a sorry reception. At
Bussorah, Ibn Aámir, unwilling to provoke hostilities, retired, and his
successor, Othmân ibn Honeif, entered unopposed; but the faction
which clung to the memory of the late Caliph was as strong at
Bussorah as that which favoured Aly, while a third party waited to
see how the tide of public opinion might run at Medîna. In Egypt it
was much the same. Cays, appointed to the command, was a
singularly wise and able ruler; but he only succeeded in passing the
frontier garrison by feigning attachment to the cause of Othmân;
while a strong and aggressive faction occupied the district of
Kharanba, swearing that they would not submit until the regicides
were brought to justice. In Yemen, the new governor obtained
possession, but only after Yála, his predecessor, had carried off to
Mecca all the treasure. The governors-elect of Aly who attempted to
enter Kûfa and the province of Syria, met with a rough reception on
the border, and were fortunate in escaping with their lives back again
to Medîna.
Dispirited by these reports, Aly again took counsel with Talha and
Zobeir. The sedition, he said, which he had apprehended, was
already kindled, and would spread like
wildfire, catching whatever came in its way. Aly sends letters to Muâvia
‘Then,’ replied they, ‘let us depart, that we and Abu Mûsa.
may do thee service in the field.’ ‘Wait,’ answered Aly; ‘the cautery
must be the last resort.’ So he resolved, in the first instance, to
address letters to Muâvia, and also to Abu Mûsa at Kûfa, demanding
their allegiance. Abu Mûsa replied in loyal terms, but at the same
time bade the Caliph beware of the spirit of disaffection which in
Kûfa was rife around him. With Syria, all communication was cut off;
weeks elapsed, and there was no reply. In truth, a strange scene
was being enacted there.
Muâvia had no sooner received the
emblems of his Master’s murder—the gory Emblems of vengeance
shirt and Nâila’s mangled fingers—than he suspended
Damascus.
on the pulpit at
hung them up on the pulpit of the Great

Mosque at Damascus. There suspended, they remained a spectacle
maddening the Syrians to a bloody revenge.[499] Still they took no
immediate action. Biding their time, they waited to see what the new
Caliph might do. Aly, had he been wise, would have used such allies
to take vengeance at once on the conspirators, and at the same time
crush the rising democracy and disaffection of the Arab tribes. In this
work Syria would have been his strongest stand-by; for it never
suffered from the Bedouin turbulence which kept Irâc and Egypt in
continual turmoil. In the early campaigns, Syria was the favourite
field of the Coreish, who, settling there in larger proportion than
elsewhere, found their influence, in consequence, better recognised.
Moreover, the conquering race inhabited the ancient Syrian cities in
common with the Christian population, which had surrendered, for
the most part, on favourable terms. Society was thus throughout all
classes of the community orderly and loyal, whereas on the banks of
the Euphrates the settlements of Bussorah and Kûfa were filled with
wild and headstrong Arab tribes who regarded the vanquished lands
as their patrimony. Law prevailed in Syria; in Irâc and Egypt, the
pride and petulance of arms. Syria was, moreover, attached to its
Coreishite governors of the Omeyyad stock, and remained thus
faithful to the end.
The Syrians had not long to wait for the outcome of Aly’s plans.
The abortive attempt to supersede Muâvia, and the refusal to arraign
the regicides, gave colour to the charge of collusion; and, with the
bloody shirt before their eyes, the Syrians soon raised that cry
against the Caliph. The majesty of
outraged law must be vindicated; and if the Muâvia sends defiant answer
assassins were not pursued to justice, then to Aly’s letter, Safar, a.h.
XXXVI. August, a.d. 656.
who but Aly was responsible for the
failure? Damascus was in this excited temper when Aly’s letter was
handed to Muâvia. At the first no answer was vouchsafed. The
envoy was kept in waiting from day to day to witness the gathering
storm. At last Muâvia sent a despatch; and a stranger document,
perhaps, was never seen. It bore, as was usual, the seal of state
outside upon the cover, which was superscribed with this address—
From Muâvia to Aly. It contained no other word, but was all blank
within. The despatch was carried by Cabîsa, a chief of the Beni Abs,
and with him the envoy was given permission to depart. Arriving at
Medîna just three months after Othmân’s death, Cabîsa presented
the letter to Aly, who read the address, and, breaking open the seal,
found the despatch all blank within. ‘What meaneth this?’ cried Aly,
starting at the unwonted sight;—‘let the enigma be explained.’
Cabîsa, instructed by his Master, inquired whether his life was safe.
‘It is safe,’ answered Aly; ‘the person of an ambassador is sacred.
Speak on.’ ‘Know then,’ proceeded the envoy, ‘that but now I left
behind me, weeping under the blood-stained shirt of Othmân, by the
pulpit of the Great Mosque at Damascus, sixty thousand warriors, all
bent on revenging the Caliph’s death—and revenging it on thee!’
‘What!’ exclaimed Aly, aghast, ‘on me! Seest thou not that I am
powerless to pursue the murderers? Oh, Lord! I take Thee to witness
that I am guiltless of Othmân’s blood. Begone! See, thy life is safe.’
As the Absite chief withdrew, the petulant slaves and rabble shouted
after him, ‘Slay the dog; slay the envoy of dogs!’ He turned, and,
apostrophising the Coreish, cried at the pitch of his voice, ‘Children
of Modhar! Children of Cays! The horse and the bow! Four thousand
picked warriors are close at hand. See to your camels and your
horses!’
Medîna was startled by the envoy’s cry,
only as Mecca had been startled by the Aly resolves to attack Muâvia
voice of Dham-dham at the battle of Bedr, and invade Syria.
four-and-thirty years before. The time was come when Aly could no
longer put his decision off. Hasan, ever poor in spirit, counselled his
father to wait; but Aly saw too plainly that the hour for action was
now or never. He gave vent to his troubled soul in martial lines which
were soon in everyone’s mouth, and from which the people first
learned his resolve to make the sword the arbiter betwixt Muâvia and
himself. An expedition against Syria was proclaimed. Captains were
appointed to command the various companies of the expected
levies, and banners were presented to them by Aly; but he was
careful to name no one who had taken any part in the attack on
Othmân.[500] Orders were also sent to Kûfa, Bussorah, and Egypt, to
raise troops for the war. Having made these preparations, Aly
mounted the pulpit and harangued the citizens of Medîna. If they
failed to fight now, he told them, the power would pass away from
them, never more to be regained. ‘Fight, then, against the cursed
schismatics, who would destroy the unity of Islam and rend in twain
the body of the Faithful. Haply the Lord will set that right which the
nations of the earth are setting wrong.’ But the people did not
respond to the appeal, and the ranks were slow of filling.
Talha and Zobeir, when they saw how
affairs were drifting, again asked that they Talha and Zobeir depart to
might be allowed to quit Medîna. With Aly’s Mecca.
leave, they now set out for Mecca, on pretext of performing the
Lesser Pilgrimage.
CHAPTER XXXVI.
REBELLION AT BUSSORAH.
A.H. XXXVI. A.D. 656.
But, before crossing arms with Muâvia,

heavy work was still in store for Aly. Work nearer home.
On her way back from the pilgrimage at

Mecca, Ayesha was met by the tidings of Ayesha retires to Mecca.
Othmân’s murder and of Aly’s accession to
the Caliphate. ‘Carry me back,’ forthwith cried the incensed and
impetuous lady; ‘carry me back to Mecca. They have murdered the
Caliph. I will avenge his blood.’
In the early period of Othmân’s
troubles, Ayesha, like the rest of the world, And propagates sedition
there.
is said to have contributed her share
towards fomenting public discontent. We are told that she even
abetted the conspirators, among whom (as we have seen) her
brother Mohammed son of Abu Bekr was a chief leader. But however
this may have been, she certainly was no party to the factious
proceedings so soon as they began to be pressed to cruel
extremities; and she had, in fact, sought to detach her brother from
them by carrying him off with her to Mecca. Vain and factious, she
had never forgiven the cold and unhandsome conduct towards her of
Aly when, on the occasion of the misadventure with Safwân, her
virtue had been doubted by the Prophet;[501] and now she would
gladly have seen Zobeir Caliph in the place of Aly. Instead, therefore,
of proceeding onwards to her home at Medîna, she returned
straightway to Mecca. There the disaffected (who ever gravitated for
safety to the Sanctuary) gathered around her, while from her veiled
retreat she plotted the revenge of Othmân, and with shrill voice
loudly harangued her audience on the enormous crime that had
desecrated the Prophet’s home and resting-place.[502]
Thus when Zobeir and Talha reached
Mecca, they found sedition well in the Zobeir and Talha, with
ascendant. The numerous members of the Ayesha, march on Bussorah,
Rabi II. a.h. XXXVI. a.d. 656.
Omeyyad family, who had fled on the
Caliph’s death from Medîna, and the adherents of that powerful
House still residing at Mecca, as well as the factious and
discontented population at large, listened eagerly to the tale of their
distinguished visitors. ‘They had left the men of Medîna,’ they said,
‘plunged in perplexity. Right and wrong had been so confounded that
the people knew not which way to go. It was therefore for the citizens
of Mecca now to lead, and to punish the traitors who had slain their
Caliph.’ The standard of rebellion was raised, and many flocked to
join it. Bussorah was chosen as the first object of attack. It was a city
which had always favoured the claims of Talha; and Ibn Aámir, the
late governor, had an influential following there. The treasure which
he had brought away with him, as well as that carried off by Alâ from
Yemen, was now expended in equipping the force, and providing
carriage for the more needy followers. Ayesha, spurning the
restraints of her sex, prepared to join the campaign and to stir up the
people of Bussorah, as she had stirred up those of Mecca. Haphsa,
daughter of Omar, another of ‘the Mothers of the Faithful,’ was with
difficulty restrained by her brother (who had just fled from Medîna,
and held aloof from either side) from accompanying her sister-widow.
At length, some four months after Othmân’s death, the rebel army
set out 3,000 strong, of whom a thousand were men of Mecca and
Medîna. Ayesha travelled in her litter on a camel, which was
destined to give its name to the first engagement in the civil war.[503]
The other widows of Mahomet residing at Mecca accompanied her a
little way, and then returned. As they parted, the whole company,
men and women, gave vent to their feelings, and wept bitterly at the
louring fortunes of Islam; ‘there was no such weeping, before or
after, as then; so that it was called The Day of Tears.’[504]
Questions even now began to arise as
to which of the two, Talha or Zobeir, would Ambition mingled with cry for
revenge.
in event of victory be the Caliph; but
Ayesha, staying the strife, as premature, desired that Abdallah son
of Zobeir should lead the prayers; and it was given out that, if
success should crown their efforts, the choice of the future Caliph
would be left, as heretofore, in the hands of the men of Medîna.[505]
Saîd, with a body of the rebel troops, distrusting the motives of the
leaders, turned aside at the last moment, and went back to Mecca.
As the cavalcade swept by him, shouting that they were on their way
to destroy the murderers of Othmân root and branch, Saîd cried out
to Merwân: ‘Whither away? the proper objects of your vengeance
are on the humps of their camels before your eyes.[506] Slay these,
and return to your homes!’ It is not improbable that with many of the
party, and notably with Talha and Zobeir, ambition, the ruling motive,
was mistaken for the desire of a just revenge. In the whirl of passion
and intrigue, party-cry too often takes the place of reason; and we
need not doubt that both leaders and followers had wrought
themselves up into the belief that punishment of the high treason
enacted at Medîna was their real object.
Yet, notwithstanding all this parade of
justice, the conscience of Ayesha was ill at Ayesha’s qualms of
ease. As they journeyed through the conscience.
desert, her camel-driver beguiled the tedium of the long autumn
nights by calling out the names of the hills and vales along which
they passed. Approaching a Bedouin settlement the dogs as usual
began to howl;—‘The Valley of Hawâb!’ cried the guide. Ayesha
started and screamed. Something dreadful which Mahomet had
spoken, about those at whom the dogs of Hawâb should bark,
flashed across her memory or imagination. ‘Carry me back,’ she
cried; and, making her camel kneel, she hastily alighted from her
litter. ‘Alas and alas!’ she continued, ‘for I heard the Prophet say,
reproaching us, as he sat surrounded by his wives one day: “O that I
knew which amongst you it is at whom the dogs of Hawâb will bark!”
It is me! I am the wretched Woman of Hawâb. I declare that I will not
take another step on this ill-omened expedition.’ They sought to
persuade her that the guide had mistaken the name; but she refused
to stir, and the army halted for her a whole day. In despair, they
bethought them of a stratagem. The following night, they raised the
cry that Aly was upon them. The greater terror prevailing, Ayesha
hastened to her camel, and the march was resumed.
The alarm, feigned for the purpose,
was not, however, altogether groundless. Aly fails to intercept the
rebels.
When rumours of the defection first
reached Medîna, Aly declared that he would not move against
malcontents at Mecca, so long as no overt act of rebellion
threatened the unity of Islam. But shortly after, a message arrived
from the widow of Abbâs[507] at Mecca, with news of the design
against Bussorah. At the first, Aly was disposed to congratulate
himself that the conspirators had not made Kûfa, with its greater
Bedouin population, their object. The son of Abbâs, however, pointed
out that Bussorah was really the more dangerous of the two,
because fewer of the leading chiefs were there, able as at Kûfa, if
they chose, to curb the people and repress rebellion. Aly admitted
the truth of this; and, now thoroughly alarmed, gave orders that the
Syrian column should march instead to Nejd, hoping thereby to
intercept the rebels on their way to Bussorah. But the people still
hung back. Finding that Abdallah son of Omar had disappeared, Aly,
in alarm lest he too should have gone to join the rebels, sent scouts
in all directions after him. Meanwhile his own daughter, Omm
Kolthûm, widow of Omar, sent to assure her father that Abdallah had
really gone on pilgrimage to Mecca, and was altogether neutral;
whereupon Aly, ashamed of his apprehensions, recalled the scouts.
[508] At last a column of 900 men was got together, at the head of
which Aly himself marched to Nejd.[509] But, although they used all
expedition on the road, they found on reaching Rabadza that the
insurgents had already passed. Not being equipped for further
advance, Aly halted at Dzu Câr. Messengers were sent to Kûfa,
Egypt, and elsewhere, demanding reinforcements; and for these the
Caliph waited, in his camp, before he ventured forwards.
To return to Ayesha. The insurgent
army, having resumed its march, reached The rebels attack Bussorah.
Bussorah, and encamped close by.
Messages were exchanged, and immediately on Ibn Honeif, the
governor, becoming aware that the cry of vengeance on the
regicides covered designs against his Master, he called together an
assembly to try the temper of the people. Finding from the uproar
that the strangers had a strong party in the city, he put on his armour,
and, followed by the larger portion of the citizens, went forth to meet
Ayesha, who, on her side, was joined from the town by the insurgent
faction. A parley ensued. Talha, the favourite at Bussorah, Zobeir,
and even Ayesha, with her shrill and powerful voice, declaimed
against the murderers of Othmân, and demanded justice. The other
side were equally loud in their protestations against the expedition. It
was a shame, they said, and a slight on the memory of the Prophet,
for Ayesha to forego the sanctity of the Veil, and the proprieties of
‘the Motherhood of the Faithful.’ Aly had been duly elected, and
saluted Caliph; and now Talha and Zobeir were treacherously
violating the allegiance which they had been the first to swear. These
both protested that the oath had been forced upon them. On this
point the controversy turned; and from words they fell to blows. Night
interposed; but fighting was resumed the following day, and with so
serious a loss to the loyalists that a truce was called, and an
agreement come to, on the understanding that the facts should be
ascertained from Medîna. If it were shown
that force had been put upon the two Reference to Medîna on
leaders to take the oath, then Ibn Honeif question of compulsion.
would retire leave the city in their hands. An envoy accredited by
either side was accordingly deputed to Medîna. He arrived while Aly
was absent in his camp, and forthwith proclaimed the commission he
was charged with, before the assembled city. The people at first
were silent. At last Osâma ibn Zeid, a Companion of the highest
rank,[510] declared that both Talha and Zobeir had done homage
under compulsion, whereupon a great tumult arose; and the envoy,
having seen and heard enough to prove diversity of opinion on the
subject, took his leave.
When tidings of these things reached
Aly, who was with his army in Nejd, he Fighting at Bussorah. City
addressed a letter to Ibn Honeif: ‘There occupied
Talha.
by Zobeir and
was no compulsion,’ he wrote; ‘neither of

these my adversaries was constrained otherwise than by the will of
the majority. By the Lord! if their object be to make me abdicate, hey
are without excuse; if it be any other thing, I am ready to consider it.’
So when the envoy returned, and upon his report the insurgents
called on Ibn Honeif to evacuate the city according to agreement, he
produced the Caliph’s letter, and refused. But the rebels had already
obtained the footing they desired within the city. Arming themselves,
they repaired to the Mosque for evening service, and, the night being
dark and stormy, were not perceived until they had overpowered the
body-guard, entered the adjoining palace, and made Ibn Honeif a
prisoner. On the following day, a severe conflict raged throughout the
city, which ended in the complete discomfiture with heavy loss of
Aly’s party, and so the government passed into the hands of Talha
and Zobeir. True to their ostensible object, these now made
proclamation that every citizen who had engaged in the attack on
Othmân should be brought forth and executed. The order was
carried rigorously out, and great numbers were put to death.[511] The
life of Ibn Honeif was, after some hesitation, spared. He was set at
liberty, his head and beard shaven, and his eyelashes and
moustaches clipped; and in this sorry plight the ousted governor
made the best of his way to Aly.
The insurgents communicated tidings
of their success to Syria. And Ayesha Ayesha’s messages to Kûfa,
wrote letters to Kûfa, Medîna, and Yemen, &c.
seeking to detach the people from their allegiance to Aly, and stir
them up to avenge the death of Othmân.
Meanwhile the citizens of Bussorah
swore allegiance to Talha and Zobeir Apathy of Bussorah towards
conjointly. To avoid all appearance of Talha and Zobeir.
rivalry, the public prayers were conducted alternately by a son of
each. Little active sympathy was evoked by the usurpers. Talha
proclaimed an expedition to proceed against Aly. But no one
responded to the call, and his spirit fell. Thus some weeks passed
uneasily, till the city was aroused by the announcement that Aly with
a great army was in full march upon it.
CHAPTER XXXVII.
BATTLE OF THE CAMEL.
Jumad II., A.H. XXXVI. December, A.D. 656.
Finding that the insurgent troops, with

Ayesha, Zobeir, and Talha, had already Aly, strengthened by
passed, Aly, as we have seen, halted for a contingent from Kûfa,
advances on Bussorah,
while at Dzu Câr in Nejd, with the view of Jumâd II. a.h. XXXVI. Nov.
strengthening his army; for, although joined a.d. 656.
on his march by the Beni Tay and some
other loyal tribes, he still felt too weak for an offensive step. To Kûfa
he addressed a special summons, inhabited as it was by many
veteran Companions on whose loyalty to the Caliphate he might
reasonably depend; and he added force to the call by holding out the
prospect that their city should be the seat of his government. ‘See,’
he wrote to them, ‘have I not chosen Kûfa before all the cities for
mine own? Unto you do I look, in these hard times, for succour, if
haply peace and unity again prevail as it behoveth among brethren
in the Faith.’ But the summons was at the first unheeded. The
overgrown city was made up of many factions; and from some of
these the message of Ayesha, demanding revenge for Othmân’s
blood, had already found response. Abu Mûsa was altogether
unequal to the emergency. Loyal to the memory of the murdered
Caliph, he yet sought to allay the ferment by a neutral course, and
urged the citizens to join neither party, but remain at home. A second
deputation meeting with no better success, the Caliph bethought him
of sending his eldest son, in company with Ammâr, the former
Governor of Kûfa, to urge his cause. The personal appeal of Hasan,
the grandson of the Prophet (albeit a spiritless creature devoted only
to his harem), had the desired effect.[512] The chord of loyalty in the
fickle city’s heart was touched; a tumult arose, and Abu Mûsa,
unable to maintain his weak neutrality, was deposed. The Arab tribes
rallied, and for the moment heartily, around such noted leaders as
Cacâa, and Adî the son of Hâtim. And soon ten thousand men, partly
by land, partly embarking on the river, set out to join the Caliph, who,
advancing slowly from Dzu Câr, awaited their arrival. Thus
reinforced, Aly was able to take the field effectively, and to march on
the rebellious city with an imposing force.
Bussorah itself was not wholly hostile.
A considerable portion of the Beni Bekr Aly opens negotiations with
and Abd al Cays went forth and joined the Talha and Zobeir.
camp of Aly. The Beni Temîm, another tribe inhabiting the city,
perplexed by conflicting obligations, stood aloof, and encamped,
under their leader Ahnaf, within a few miles of the city, watched what
the result might be. Still the numbers bound to the insurgent cause
nearly equalled the Caliph’s army; and on its approach they marched
forth with Talha and Zobeir at their head, and Ayesha in a well-
fenced litter on her camel. But Aly’s thoughts were for peace, if it
were possible. He was a man of compromise; and here he was
ready, in the interests of Islam, magnanimously to forget the insult
offered to his throne. Apart, indeed, from personal jealousies, there
was no disagreement sufficient to bar the hope of reconciliation. The
cry of Talha and Zobeir was for vengeance against the murderers of
Othmân. As yet, Aly did not deny that justice should be dealt out
against them. But he was obliged to temporise. He had in his army
great numbers of these very men, and he felt that to inflict
punishment on them, as his adversaries required, would be, for the
present at least, impossible. Holding these views, he halted while still
some little way from Bussorah, and sent forward Cacâa to
expostulate with Talha and Zobeir. ‘Ye have slain six hundred men of
Bussorah,’ said Cacâa to them, ‘for the blood of Othmân; and lo! to
avenge their blood, six thousand more have started up. Where in this
internecine work are ye to stop? It is peace and repose that Islam
needeth. Give that, and again the majesty of law shall be set up, and
the guilty brought to justice.’ As he spoke, the truth flashed on the
minds of Zobeir and Talha, and even of Ayesha; and they returned
word that if these really were the sentiments of Aly, they were ready
to submit. After several days were spent in such negotiations, Aly,
rejoicing at the prospect of a bloodless compromise, advanced.
But as we have seen, Aly’s army,
recruited at random from the Bedouin Tactics of the regicide.
settlements, comprised a great number of
notorious regicides. Afraid of bringing these into contact with the
heated army of his opponents, which was still breathing out fire and
slaughter against them, Aly gave command that none who had
shared in the attack on Othmân should for the present accompany
him in his advance.[513] These in their turn, with Ashtar and Ibn
Sawda at their head, became alarmed. Talha’s adherents, sworn to
their destruction, were double their number. If peace, then, were
patched up, as was now proposed, what were they all but doomed
men? Reasoning thus, they held a secret conclave, and came to the
conclusion that their only safety lay in precipitating hostilities, and
thus forcing Aly’s hand to crush their enemies. Accordingly, when the
Caliph marched, they remained behind, but with the resolve that,
when the right moment came, they would advance and throw
themselves upon the enemy.
The army of Bussorah, numbering from
twenty to thirty thousand men, remained Continued peaceful
encamped on the outskirts of the city. Aly’s negotiations.
force, advancing unopposed, halted within sight of them. The
citizens, as well as Talha and Zobeir, sent deputations to the Caliph;
and negotiations for peace went on, evidently of a sincere and
substantial character. Aly himself approached on horseback, and
Talha with Zobeir rode forth to confer with him. ‘Wherefore came ye
out?’ asked Aly; ‘did ye not swear homage to me?’ ‘Yea,’ replied
Talha, ‘but with the sword over our necks; and now our demand is
that justice be executed against the regicides.’ Thereupon Aly said
that he too held them guilty; and in no measured terms exclaimed,
‘The Lord blast the murderers of Othmân!’ But they must bide their
time. Zobeir on his side was softened by a passage from some
conversation of the Prophet recalled by Aly to his mind; and he
bound himself by an oath that he would not fight.[514] Then they all
retired. And both armies, understanding that pacific negotiations
were in progress between their leaders, went to rest that night in
such security as they had not felt for many weeks.
But the spell was rudely broken.
Towards morning, a sudden shock Armies both surprised by
changed the scene. The regicides, finding regicides.
that the time for action was fully come, had, during the night, carried
their design into execution. Squadron upon squadron of Bedouin
lances bore down, while it was yet dark, upon the Bussorah tents,
and in a moment all was confusion. Each camp believed that it was
being treacherously attacked by the other; and the dawn found both
armies drawn up, just as the conspirators desired, in mortal combat
one against the other. In vain Aly, perceiving the cause, endeavoured
to hold back his men. The sense of treachery embittered the conflict.
It was a strange engagement, and the first occasion on which
Moslems crossed swords with Moslems. It resembled one of the
deadly battles of old Arab times, only that for tribal rivalry were now
substituted other passions. The clans were broken up, and it became
rather a contest between the two rival settlements: ‘The Beni Rabia
of Kûfa fought against the Beni Rabia of Bussorah, the Beni Modhar
of the one against the Beni Modhar of the other;’ and so on, we are
told, with the various tribes of the Peninsula, and even with families,
one part arrayed against the other. The Kûfa ranks were urged on by
the regicides, who felt that, unless Aly conquered, they were
altogether lost. The field was contested with an obstinacy and
sanguinary issue which can be only thus accounted for. An eye-
witness tells us that ‘when the opposing sides came breast to breast,
it was with a furious shock, the noise whereof was like that of
washermen at the ghaut.’[515] The attitude of the leaders was in
marked contrast with the bitter struggle of the ranks. Zobeir, half-
hearted since his interview with Aly, had left the battle-field according
to his promise, and was killed in an adjoining valley by a soldier of
Ahnaf’s neutral company. Talha, disabled
by an arrow in the leg, was carried into Zobeir and Talha killed.
Bussorah, where he died. Bereft of their
leaders, the insurgent troops gave way. They were falling back upon
the city, when they passed by the camel of Ayesha, stationed in the
rear. Attacked fiercely all round, she was screaming unceasingly,
with fruitless energy, from within her litter, the old cry, ‘Slay the
murderers of Othmân.’ The word ran through the retiring ranks, that
‘the Mother of the Faithful was in peril,’ and they gallantly stayed
their flight to rescue her. Long and cruelly the renewed conflict raged
around the fated camel. One after another, brave warriors rushed to
seize the standard by its side, and one after another they were cut
down. Of the Coreish, seventy perished by the bridle. At last, Aly,
perceiving that the camel was the rallying point of his enemy, sent
one of his captains to hamstring and disable it. With a loud scream,
the animal fell to the ground.[516] The
struggle ceased and the insurgents retired The insurgents defeated.
Ayesha escapes unhurt.
into the city. The litter, bristling all round
with arrows like a hedgehog, was taken down, and, by desire of Aly,
placed in a retired spot, where Ayesha’s brother, Mohammed,
pitched a tent for her. As he drew aside the curtain of the litter, she
screamed at the unknown intrusion;—‘Are thine own people, then,’
he said, ‘become strange unto thee?’ ‘It is my brother!’ she
exclaimed, and suffered herself to be led into the tent. The brave but
wayward lady had escaped without a wound.
The carnage in this ill-starred battle
was very great. The field was covered with Losses in the battle.
ten thousand bodies in equal proportion
from either side;[517] and this, notwithstanding that there was no
pursuit. For Aly had given stringent orders that no fugitive should be
followed, nor any wounded soldier slain, nor plunder seized, nor the
privacy of any house invaded. A great trench was dug, and in it the
dead were buried, friends and foes together. Aly, who encamped for
three days without the city, himself performed the funeral service. It
was a new experience to bury the dead slain in battle not against the
infidel, but believer fighting against believer. Instead of cursing the
memory of his enemies (as became too soon the fashion in these
civil wars), Aly on this occasion spoke hopefully of the future state of
those who had entered the field, on whichever side, with an honest
heart. When they brought him the sword of Zobeir, he cursed the
man who had taken his life; and, calling to mind the feats of the
deceased warrior in the early battles of Islam, he exclaimed: ‘Many a
time hath this sword driven away care and sorrow from the Prophet’s
brow.’ The Moslems might well mourn over the memory both of Talha
and Zobeir, when they remembered how on the field of Ohod the
former had saved the life of Mahomet at the peril of his own; and
how often the latter, conspicuous from afar in his saffron turban,
carried confusion into the ranks of the idolaters while they yet held
possession of Mecca. Their fall, and that of many amongst the
Companions, was a loss to the empire itself, because seriously
weakening the Coreish in the struggle that yet remained to be fought
out betwixt them and the Arab tribes. In fact, this victory of Aly was
virtually the victory of these latter—that is to say, of the regicides,
and of the factious citizens of Kûfa. Thenceforward Aly himself was
almost wholly dependent on them. If, instead, he had succeeded in
effecting a strong and lasting compromise with Talha and Zobeir, his
position would have been incomparably strengthened.
The bearing of Aly after the victory was
generous towards the fallen foe. Having Aly’s magnanimity towards
entered the city, he divided the contents of the enemy.
the treasury amongst the troops which had fought on his side,
promising them a still larger reward when the Lord should have
delivered Syria into his hands. But otherwise he treated friends and
foes alike, and buried in oblivion the animosities of the past. Merwân
and the immediate adherents of the house of Omeyya fled back into
the Hejâz, or found refuge in Syria. All that remained in the city
swore fealty to Aly. The only class dissatisfied was that of the slaves
and rabble, who murmured at having no share in the treasure, nor
any chance of plunder. These, gathering into marauding bands,
occasioned much disquietude to the Caliph, and indeed hastened his
departure with the view of checking the mischief they were bent on.
[518]
Ayesha was treated by Aly with the

honour and reverence due to ‘the Spouse Ayesha retires to Medîna.
of the Prophet both in this life and in the
life to come.’ She was now five-and-forty years of age, but had lost
little of the fire and vivacity of her early days. After the battle, the
Caliph visited her tent, and expressed his satisfaction at finding her
unhurt; adding mildly, but half reproachfully: ‘The Lord pardon thee
for what hath passed, and have mercy upon thee.’ ‘And upon thee!’
was her ready answer. The best house in Bussorah was given up to
her; and there she was waited on by her own adherents. Not many
days after, she was dismissed, with a retinue of forty handmaids, and
attended by her brother. Aly himself accompanied her for a mile or
two on foot; and a large party went as far as the first stage, to bid her
farewell. At Mecca she performed the Lesser Pilgrimage; and then
retiring to Medîna, no more attempted to interfere with the affairs of
State. Her nephew Abdallah son of Zobeir (and of her sister
Asma[519]) retired with her. He is famous as the nearly successful
usurper of the Caliphate; but that was not till Ayesha had passed
away. She spent the remainder of her days at Medîna. There crowds
of pilgrims visiting the Prophet’s tomb (her own apartment) gazed
wonderingly at her as the once beautiful and favourite wife of
Mahomet; while she, becoming the garrulous and fertile source of
tradition, entertained them with stories of the Prophet, ascending as
far back as the earliest memories of her childhood. She died in the
fifty-eighth year of the Hegira, aged about sixty-six, having passed
forty-seven years in widowhood.[520]
Aly did not stay long in Bussorah.
Having appointed his cousin, Abdallah son Ibn Abbâs governor of
of Abbâs, as governor of the city, with Ziâd, Bussorah.
the able administrator, to aid him, as in charge of the treasury, he set
out for Kûfa.

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1. Calculate the missing value:

2. Calculate the missing value:

3. Calculate the missing value:

5. Calculate the missing value:

a) What is the current economic value to the Chans of each offer?

68. What is meant by the "time value of money"?

95. Calculate the missing value:

97. Calculate the missing value:

98. Calculate the amount of interest owed on the repayment date:

100.Calculate the missing value:

101.Calculate the missing value:

103.Calculate the missing value:

114.Calculate the missing values:

115.Calculate the missing values:

Investment date Amount invested Interest rate M

133.Calculate the missing value:

134.Calculate the missing value:

185.What principal will grow to $12,031.25 at 7.5% interest in 15 months?

198.Calculate the maturity value of an investment of $22,500 after 9 months at 13.45%.

A. March 19, 2005

A. January 11 of the following year.

A. Buy now - savings of $28.74

A. Buy now - Savings of $33.88

A. Buy now - Savings of $20.87

A. Buy now - Savings of $10.52

A. Option 1 - benefit of $22.35

A. Option 1 - benefit of $111.85

A. Option 1 - benefit of $52.35

A. Option 1 - benefit of $14.74

1. Calculate the missing value:

2. Calculate the missing value:

3. Calculate the missing value:

5. Calculate the missing value:

January 29, 2014

1.75% per month

$14,100.00 (Principal) and $1279.58 (Interest).

$3,450.00 (Principal) and $251.56 (Interest)

March 24, 2013

loan = 3.91%; the two options are essentially equivalent

a) What is the current economic value to the Chans of each offer?

a) $143,832.54; b) Kim's offer worth $1,033.03 more

a) $284,440.15 b) $284,922.78; c) the $130,000 down option saves $482.63

a) $566.70; b) $66.75; c) 29.15%

96. Calculate the missing value:

97. Calculate the missing value:

1.25% per month

99. Calculate the amount of interest owed on the repayment date:

100. Calculate the missing value:

102. Calculate the missing value: