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Bank PO Questions

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Q:

Rondell's parents borrow $6,300 from the bank for a new car. The interest rate is 6% per year. How much simple interest will they pay if they take 2 years to repay the loan?

A) 556 B) 665
C) 756 D) 856
 
Answer & Explanation Answer: C) 756

Explanation:

I=prt

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Q:

You put $750 into a certificate of deposit. Your simple annual interest rate is 4%. You receive a check for the interest at the end of each year. How long will it take to earn $150 in interest?

A) 5years B) 6years
C) 7years D) 8years
 
Answer & Explanation Answer: A) 5years

Explanation:

I=prt

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Q:

You deposit $600 into a 6 month certificate of deposit. After 6 months the balance is $618. Find the simple annual interest rate.

A) 5% B) 4%
C) 6% D) 7%
 
Answer & Explanation Answer: C) 6%

Explanation:

I=prt

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Q:

A merchant receives an invoice for a motor boat for $20 000 with terms 4/30, n/100. What is the highest simple interest rate at which he can afford to borrow money in order to take advantage of the discount?

A) 247.67 B) 237.67
C) 227.67 D) 215.67
 
Answer & Explanation Answer: A) 247.67

Explanation:

Suppose the merchant will take advantage of the cash discount of 4% of $20 000 = $800 by paying the bill within 30 days from the date of invoice. He needs to borrow $20 000 = $800 = $19 200. He would borrow this money on day 30 and repay it on day 100 (the day the original invoice is due) resulting in a 70-day loan. The interest he should be willing to pay on borrowed money should not exceed the cash discount $800.

 

r=I/pt=21.73%

 

The highest simple interest rate at which the merchant can afford to borrow money is 21.73%. This is a break-even rate. If he can borrow money, say at a rate of 15%, he should do so. He would borrow $19 200 for 70 days at 15%. Maturity value of the loan is $19 200(1+0.15(70/365))=$19 752.33

 

savings would be $20 000 − $19 752.33 = $247.67

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Q:

How long will it take $3000 to earn $60 interest at 6%?

A) 2months B) 3months
C) 4months D) 5months
 
Answer & Explanation Answer: C) 4months

Explanation:

t=I/pr

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Q:

A loan shark made a loan of $100 to be repaid with $120 at the end of one month. What was the annual interest rate?

A) 210% B) 220%
C) 230% D) 240%
 
Answer & Explanation Answer: D) 240%

Explanation:

r=I/PT

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Q:

Determine the exact and ordinary simple interest on a 90-day loan of $8000 at 812 %

A) 150$ B) $160
C) $170 D) $180
 
Answer & Explanation Answer: C) $170

Explanation:

Exact interest, I= prt = $8000 × 0.085 × 90/365 = 167.67

 

Ordinary Interest, I= Prt = $8000 x 0.085 x 90/360 = 170

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Q:

loan of $15 000 is taken out. If the interest rate on the loan is 7%, how much interest is due and what is the amount repaid if the loan was taken out on April 7 and is due in seven months

A) 13615.52 B) 14615.52
C) 15615.52 D) 16615.52
 
Answer & Explanation Answer: C) 15615.52

Explanation:

I = prt = [15000 × 0.07 × (214/365) ]=615.52

Future value, S = P + I = $15 000 + $615.52 = $15 615.52

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