TIME
VALUE OF MONEY 3-5
PRACTICE EXERCISE 3.1
Directions: Calculate the answer to each question and write the correct answer.
Check your solution with the Answer Key on the next page.
1.
If you borrow $300,000 for two years at a 9% simple annual interest rate, how
much interest will you pay?
$_____________________
2.
If you invest $270,000 for one-half year at a 9.5% simple annual interest rate, how
much will you earn on the investment?
$_____________________
3.
If you borrow $500,000 for one year and have to pay back $540,000 at the end of
the year ($500,000 is the return of the principal; $40,000 is the interest), what is
the simple interest rate you are being charged for the loan?
________%