Simple Interest Formula Discussion
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Simple Interest Formula Discussion
Question Description
Instructions
Please work out the math questions as related to the following 4 areas:
Questions 1, 2, 3 on “Simple” Interest, not compounded
Questions 4 & 5 on Profit and Loss
Question 6 on Prorations
Question 7 on Capitalization
Please refer to the formulas and examples in the links below and in the “Resources” section below the Modules.
This math problems are no more difficult than what you had in 9th grade Algebra (if you remember) ! And, yes, you may certainly use a calculator and consult with family or friends, have fun. Please Note: Once your assignment is submitted and graded, the grade will be final, no re-submissions will be allowed.
Simple Interest
1. An investor held a 5-year Second Trust Deed (mortgage) which was recently paid in full at 7.2 % interest per annum. If the total interest paid by the borrower was $14,130, what was the original loan amount ?
2. In connection with a personal loan, a borrower paid $100 interest during the first quarter, if the loan amount is $5,000, what is the interest rate ?
3. Albert borrowed $3,800 and signed a straight note with an interest rate of 6.5 % per annum (per year). If he paid $370.50 interest during the life of the loan, how long was the term of the loan ?
Profit & Loss
4. Mr. Jones realized a loss of 8 % when he sold his vacant land in the desert for $142,600. What did he originally pay for the property ? Read the Profit & Loss examples.
5. A 2-bedroom condo gained a profit of 12 % when it sold for $385,000. What was the original price paid for the condo ? Read the Profit & Loss examples.
Proration
6. Seller sold her 8-unit apartment building to a buyer and the deal closed on the 13th of the month. She already collected $13,800 in rent, plus $1,725 in back rent for the previous month from a tenant. How much does the seller owe the buyer at closing for the prorated rental payments ?
Capitalization (is the method of converting income into value). Also note: when the cap rate goes up, the value of the property goes down.
7. A property is valued at $600,000 using a capitalization rate of 8 %. If the appraiser happened to use a capitalization rate of 7.5 % instead, what would the new estimated value of the property ? Use the capitalization formula below. Important hint: to get this correct, you need to figure out the annual income first (on the 8% rate).
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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Simple Interest Formula Discussion