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MM255 Business Math and Statistical Measures

MM255 Business Math and Statistical Measures MM255 Business Math and Statistical MeasuresInterest and Loan Concepts Assignment (Total 40 Points)Question 1: (10 Points)a) State the simple interest formula and explain how simple interest is calculated.b) Calculate the simple interest for a loan for $41,545 for 4 1/2 years at 7.5% interest per year.Round to the nearest cent.c) How much is owed in total at the maturity date? Question 2: (10 Points)You decide to take out a loan for $7,000, at 6% yearly interest on the date that Unit 4 starts. Ifyou repay the loan on December 31st (at the end of the current year).a) Exact time (days) of loan: __________b) Using ordinary interest, calculate the interest and total owed.c) Using exact interest, calculate the interest and total owed. Question 3: (10 Points)You decide to take out an ordinary interest loan of $20,000 at 5%, on a 90 day note.a) In 45 days you decide to make a payment of $10,000 on the loan. What is your new principal?Explain how you got the answer.b) How much did you pay at the end of the loan overall? How does this differ from how much youwould have paid overall had you not made a payment of $10,000 after 45 days?Question 4: (10 Points)Find the bank discount and proceeds using ordinary interest on an unsecured promissory notemade to Joe Smith for $11,000 at 8% annual simple interest from June 15 to September 15 forthis year. Use the steps below to find your answers.a) Explain the difference between a simple interest note and a simple discount note. MM255 Business Math and Statistical Measuresb) Exact time (days) of note: __________c) What is the bank discount?d) What are the proceeds that Joe Smith receives?e) What is the amount Joe Smith repays?