BAHAMAS INSTITUTE OF FINANCIAL SERVICES Business Calculations Mid-term test #2 (Summer 2014) (Chapters 10, 11, 12, 15, 16 part 1 & 21) NAME:_____________________________________ DATE:________________________  You have 1 hour and 15 minutes to complete this quiz.  Answer all questions.  Show your working and write your answer(s) in the space provided for each question.  A calculator may be used along with supplied tables.  The number of points allocated for each question is shown in brackets [] next to the question.  The total number of marks for this paper is 65 with an overall weighting of 15%. 1. Calculate the simple interest on $16,000 at 3% for 8 months. [2]

2.

Complete the following using the exact interest method. The days-in-a-year calendar may be used. [4] Interest Date Date Exact Simple Maturity Principal rate borrowed repaid time Interest value

$20,000

7%

May 6

August 14

3.

Find the rate, assuming 360 days. Principal Time Simple Interest Rate

[3]

$6,000

180 days

$280

1

4.

Laura Black borrowed $4,000 on a 4% 60-day note. After 15 days, Laura paid $700 toward the note. On day 40, Laura paid an additional $2,000. What is Ms. Black’s ending balance due under the U.S. Rule? (Assume 360-day year) [8]

5.

Write simple interest note or simple discount note next to each of the following statements, indicating which of the two types of notes is being referred to by the statement. [5] (a) Interest deducted in advance (b) Maturity value = Face value + Interest (c) Effective rate is higher (d) Also called noninterest bearing note (e) Borrower receives the face value ____________________________________ ____________________________________ ____________________________________ ____________________________________ ____________________________________

6.

On April 10, Joe Brown accepted a $40,000 promissory note