Norma Nowak Has a Hair Salon in the Shopping Center

question 8

Short Answer

Norma Nowak has a hair salon in the shopping center. Norma borrowed $4,250 to buy additional equipment for her salon. The loan was for 200 days at 9.1% exact simple interest. How much interest must Norma pay when the 200 days have elapsed? (Use a 365-day year.)

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Definitions:

Bondholder

An investor who owns bonds issued by corporations or governments, thereby lending money to the issuer in return for periodic interest payments and the return of principal at maturity.

Annual Coupon Rate

The interest rate a bond pays its holder, expressed as a percentage of its face value and payable annually.

Bond

A fixed-income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental, which includes terms regarding the interest rate and when the loaned funds (bond principal) must be paid back (maturity).

Effective EAR

The Effective Annual Rate is the actual return on an investment, taking into account the effect of compounding interest.