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Question 1: (10 Points)

a)   State the simple interest formula and explain how simple interest is calculated.

b)   Calculate the simple interest for a loan for $24,700, for 2 1/4 years at 3.4% interest per year. Round to the nearest cent.

c)   How much is owed in total at the maturity date?

Question 2: (10 Points)

You decide to take out a loan for $12,500, at 4.25% yearly interest, on the date September 16. You will repay the loan on December 31st (at the end of the current year).

a)     Exact time (days) of loan: _________

b)   Using ordinary interest, calculate the interest and total owed.