Interests

Simple Interest
1. The simple interest on a sum of money invested at 3% per annum for 2 years was
$ 39.75. Calculate the sum of money invested.

2. Anna put $ 2 500 in the bank and left it for 2 years. At the end of the two years she
found that she had $ 2 700 in her account. Calculate
(a) the simple interest earned.
(b) the annual rate percent paid by the bank.

3. Pamela borrows $ 2 500 at 12% per annum simple interest for 2 years. In addition,
a fee of $ 200 is charged for processing the loan.
Calculate
(a) the sum of money, which she will have to repay the bank at the end of the
two years.
(b) the profit percent the bank makes on the loan
(c) the monthly installment, is she is required to repay the loan in 24 equal
monthly installments.

4. A Building Society offers a rate of 11% per annum simple interest. Beth-Ann
invested $24 000 in the society for 15 months.
(a) Calculate the amount of money due to her at the end of this period.
The Building Society charged her a processing fee of $ 1 500.
(b) Calculate the fee as a percentage of the money originally deposited.

5. A man deposits $800 in his account at a bank which offers 6% simple interest per
annum.
(a) How much interest would he receive on the $ 800 after 9 months.
(b) How long would it take for the $ 800 to increase to $ 992?
6. The table below gives information on the values and the rates of depreciation in
value of two motor vehicles.
Yearly Rate of Value after
Motor Vehicle Initial Value
Depreciation One Year
Taxi $40 000 12% $P
Private Car $25 000 Q% $21 250

Calculate (a) the values of P and Q

(b) the value of the Taxi after 2 years.

Compound Interest
1. A woman bought a stove for $ 2 800. After using it for 2 years she decided to trade
in the stove. The company estimated a depreciation of 15 % for the first year of its
use and a further 15 % on its reduced value, for the second year.
(a) Calculate the value of the stove after the two years.
(b) Express the value of the stove after two years as a percentage of the original
value.

2. Mrs. White bought a computer on 1 January 1996, at a cost of BDS $ 4 260. Given
that the value of the computer depreciated by 20% each year, calculate, in Barbados
dollars, the value of the computer at the end of 1997.

3. A loan of $12 000 was borrowed from a bank at 14% per annum. Calculate
(a) the interest on the loan at the end of the first year
(b) the total amount owing at the end of the first year
A repayment of $7 800 was made at the start of the second year. Calculate
(c) the amount still outstanding at the start of the second year.
(d) the interest on the outstanding amount at the end of the second year.

(d) A credit union pays 8% per annum compound interest on all fixed deposits. A
customer deposited $ 24 000 in an account. Calculate the TOTAL amount of money
in the account at the end of two years.