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March 16th, 2014, 03:42 AM   #1
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Calculating Simple Interest Rate Per Annum

Question:
Seventy days after the issue date, the original owner sold the note to Tiffany for $97,651.13. Calculate the rate of simple interest p.a. used by Tiffany in calculating her purchase price. (The answer should be expressed as a percentage correct to 2 decimal places.)


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March 16th, 2014, 01:06 PM   #2
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Re: Calculating Simple Interest Rate Per Annum

You need to tell us the face value of the note.
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March 16th, 2014, 09:19 PM   #3
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Re: Calculating Simple Interest Rate Per Annum

I see you got no answer here either:
http://ph.answers.yahoo.com/question/in ... 006AAcACO9

As Mathman said, more info required.
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March 20th, 2014, 03:40 AM   #4
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Re: Calculating Simple Interest Rate Per Annum

Full Information:

 A  180?days promissory note (this is similar to a  bank bill) will mature for $100,000 plus simple i nterest at 7%p.a. Calculate 
the maturity value of the note. (Correct the answe r to 2 decimal places.)  
Seventy days after the issue date, the original ow ner sold the note to Tiffany for $97,651.13. Calcu late the rate of simple 
interest p.a. used by Tiffany in calculating her p urchase price. (The answer should be expressed as  a percentage correct to 2 
decimal places.)  
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March 20th, 2014, 08:57 AM   #5
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Re: Calculating Simple Interest Rate Per Annum

Why did you not post in full to start with?

Hint: Tiffany is investing $97,651.13 today and will collect $103,500 in 110 days.
The $3,500 interest on the note assumes a 360day year.
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March 20th, 2014, 08:04 PM   #6
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Re: Calculating Simple Interest Rate Per Annum

is the Answer 5.33%?

Formula is r=((S/P)-1)/T

Where S future Value--->97651.13
P is current value---->96663.14
T is Time-->70/365

so r=0.0533.



Another way, if i am assuming 180 day period, getting the same answer
T=70/180

r=((97651.13/96663.14)-1)/(70/180)
r=0.026

Now multiplying
=r*(365/180)
=(0.026)*(365/180)
=0.0527
=0.053=5.3%
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March 20th, 2014, 09:14 PM   #7
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Re: Calculating Simple Interest Rate Per Annum

I can't tell what you're doing; why present and futire values?

She will collect 103,500 after 110 days (180-70),
so earning interest of 5,849 (103,500-97,651) over 110 days.

Find the equivalent interest over 360 (or 365) days,
then calculate the rate required to achieve that.
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