MM V2 Ordinary vs Exact Interest Checkpoint

Maturity Value is

• A loan you repay with one payment after a specified period of time.

• A written promise to pay a certain sum of money on a specific date in the future.

• The total amount you must repay for a loan.

• A loan you repay over a period of time.

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F1

Ordinary Interest

• interest calculated based on a 360-day year

• interest calculated based on a 365-day year

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F1

Exact Interest

• interest calculated based on a 360-day year

• interest calculated based on a 365-day year

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F1

Anita’s bank granted her a single-payment loan of $5,200 for 60 days to pay for her new merchandise for her candle shop. Determine the interest of the loan if the rate is 7.5% ordinary interest

• $65

• $5265

• $64.11

• $5264.11

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F2

Anita’s bank granted her a single-payment loan of $5,200 for 60 days to pay for her new merchandise for her candle shop. Determine the maturity value of the loan if the rate is 7.5% ordinary interest

• $65

• $5265

• $64.11

• $5264.11

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F2

Parker purchased a new surfboard that cost $500 and financed it for 100 days . Determine the interest of the loan if the rate is 8.25% exact interest.

• $11.30

• $511.30

• $11.46

• $511.46

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F2

Parker purchased a new surfboard that cost $500 and financed it for 100 days . Determine the maturity value of the loan if the rate is 8.25% exact interest.

• $11.30

• $511.30

• $11.46

• $511.46

Hector added a room to his house costing $9850. He financed the cost on November 6 and payed it back on May 5. Determine the maturity value of the loan if the rate is 7.7% ordinary interest

• $10224.03

• $10229.23

• $374.03

• $379.23

Haliey purchased a piano costing $4800. She financed the cost on June 10 and payed it back on September 8. Determine the interest of the loan if the rate is 9.7% exact interest.

• $116.40

• $114.81

• $4916.40

• $4914.81

If you're borrowing money, which type of interest would save you more money if the interest rate and time for loan were exactly the same?

• Exact Interest

• Ordinary Interest

• They would cost the same