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1、1,Chapter 6 Simple Interest,6.2 Determining The Time Period (Term),2,Whenever possible, the time period t should be determined using the exact number of days involved . Table 6.1Month Days Month DaysMonthDaysJanuary 31 May31September30February 28 June30October31March 31 July31November30April 30 Augu
2、st 31 December31,3,Example: Find the exact number of days from January 23,1994 to June 7,1994,number of days =(31-23+1)+28+31+30+31+6 1 2 3 4 5 6 =135 days,Solution:,4,5,Example6.2A: Calculating And Using The Exact Number of Days,A, Calculate the term for each of the following loans. Loan Date Date
3、Interest principal advanced repaid rate pa (1)$3,000 March 31,1997 September 4,1997 (2)$23,000 November 29,1997 April 1,1998 13.4% (3)$14,600 January 11,1996 June 4,1996 B, Calculate the interest due on the repayment date for each loan.,6,Solution:,A, We calculate the term with two methods, respecti
4、vely. Method 1 use table 6.1 , and Method 2 use table 6.2.,7,(1) From March 31 ,1997 to September 4, 1997,The number of days=1+30+31+30+31+31+3=157 Date Day numberSeptember 4,1997 247March 31, 1997 -90 =157,Method 1,Method 2,The exact numberof days is 157.,8,(2) November 29,1997 to April 1,1998,The
5、number of days=2+31+31+28+31+0=123 daysDate Day numberDecember 31,1997 365November 29,1997 -333 32April 1,1998 +91 =123,Method 2,The exact numberof days is 123.,Method 1,9,(3) January 11,1996 to June 4,1996,the number of days=21+29+31+30+31+3=145 daysDate Day numberJune 4 (general) 155 +1June 4,1996
6、 156January 11,1996 -11Time period 145,The exact numberof days is 145.,Method 2,Method 1,10,B Calculate Interest,(1)term = 157days r= p=$3000I=prt=$ 164.53,(2)term = 123days r= 13.4% p=$23,000I=prt=$ 1038.59,(3)term = 145days r= p=$14,600I=prt=$ 826.5,11,When a loans interest rate is linked to the p
7、rime rate charged by the chartered banks, it is described as a variable interest rate or a floating interest rate.,The prime rate of interest is the banks lowest lending rate.,12,EXAMPLE 6.2B Variable Interest Rate,Winston borrowed $5000 on April 7. The interest rate was tied to the prime lending ra
8、te and consequently it changed whenever the prime lending rate changed. The interest rate was initially 10.5%pa. It increased to 11%pa effective May 23, and to 11.25% pa effective July 13. What amount was required to repay the loan on August 2?,13,Interval Number Interest Interest of days rate April 7 to May 23 24+22=46 10.50% $66.16 May 23 to July 13 9+30+12=51 11.00% $76.85 July 13 to August 2 19+1=20 11.25% $30.82 Total $173.83 The amount required to repay the loan on August 2 was $5000+$173.83=$5173.83.,
