Chapter 2 – Exercise Resolution

FORM

Simple Interest Regime

S C J J C i n Sn C (1 i n) Sn
C
1 I n
Sn Sn C i n C i n
1 1 I swearexact I swearCommercial
C C 365 360
i n
i

2.7 —Proposed Exercises 1

1) What is the amount of an investment of R$ 100,000.00 invested for a period of 12
months, at an interest rate of 5% per year?

Solution
Sn C (1 i n) S1 100000 (1 0.05 1) R$105.000,00

What is the initial capital that should be applied at a rate of 0.5% per month, so that at the end
In 1 and a half years, generate R$ 100,000.00?
Solution
Sn 100000
C C R$ 91.743,12
1 i n 1 0.005 18

What is the time frame for an investment at 5% per month that doubles its initial capital?
Solution
Sn 2C
1 1
C C 1
n n 20 months
I i 0.05

4) What is the annual interest rate that we should apply to an initial capital so that it
what is your value in a period of 10 years?
Solution
Sn 2C
1 1
C C 2
i 0.2 20% per annum.
n 10 10

What is the total accumulated interest from an investment of R$ 20,000.00, at the interest rate?
at 5% per annum for a period of 7 years?
Solution
J C i n 20000 0.05 7 R$ 7,000.00

1
In solving proposed problems, consider commercial years of 360 days and months of 30 days, unless otherwise specified.
mention otherwise. Consider in this chapter the Simple Interest Regime.

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 Chapter 2 - Exercise Resolution

6) An investor invested R$ 750,000.00 in the financial market and after 183 days
rescued R$ 1,033,650.00 gross.
a) What was the daily rate of simple interest earned by the investor?
b) What is the effective daily rate if there is a 10% tax on operations?
financial applied on the earnings obtained, in advance and
in advance?
Solution
Sn 1033650
1 1
C 750000
a)I i 0.002067 0.2067% a.d.
n 183

b) Advanced
S C J J S C 1033650 750000 283650
T t J 0.10 283650 28365
Initial disbursement of 750,000 28635 778365
Sn 1033650
1 1
C 778365
il 0.001792 0.1792% A.D.
n 183
It should be noted that it is being assumed that the yield is fixed;
then, known at the time of application.
Postecipada
S C J J S C 1033650 750000 283650
T t J 0.10 283650 28365
Net redemption of 1,033,650 28635 1005285
Sn 1005285
1 1
C 750,000
il 0.001860 0.1860% a.d.
n 183

What is the net amount of an investment of R$ 8,000.00, with a term of 5 months,

applied to the simple interest rate of 22% per year, if a tax rate is paid
equal to 20% of the interest, upon redemption of the investment?

Solution
S n C (1 I n)e J C i n
Sn Sn  T Sn  t J
5
J C I n 8000 0.22 733.33
12
S5 C J 8000 733.33 8733.33
S5 S5 t J 8733.33 0.2 733.33 R$8,586.67

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 Chapter 2 - Exercise Resolution
8) Ana invested R$ 100,000.00 at a simple interest rate of 12% per year for a period of 50 months.
Meanwhile, before the deadline, he managed to increase the rate to 18% per year.
regarding the remaining term. It is known that, at the end of the period, he received an amount of
R$ 165,000.00. What were the terms during which the capital was invested in each of the
rates?
Solution
0.12
J1 100000 1
12
0.18
J2 100000 n2
12
S50 100000 J1 J 2 165000
n1 n2 50
165000 100000 100000 0.01 n1 100000 0.015 n2
65000 1000n11500n 1000n
2
1500
1
50 n  1
65000 1000n1 75000 1500n1
500n1 10000
10000
1 20 months 2 30 months
500
9) A person made two investments, with the same initial capital of
R$ 3,000.00, in two financial institutions, on the same day, obtaining two rates
of identical interest rates. Knowing that the total term of the two investments was 60 days;
the difference between the deadlines is 10 days; and one earned interest of R$ 300.00
more than the other, what were the terms of the two applications and the interest rate
daily obtained?

Solution
J1 3000 i n1
J2 3000 i n2
J1 J 2 300
n1 n 10
2
2n 1 70 n 35 days
1
n 252 days
1 n2 60
3000 I 1
n  3000 i 1
n 10  300
3000 i n1 n 110 300
300
i 0.01 1% a.d.
30000

10) An application yields 15% per year and is taxed by the Financial Operations Tax
(IOF), upon receiving the yield, at a fixed rate of 1.5% applied on the
same. If you invested R$ 100,000.00 for a period of one year, what is the net rate?

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 Chapter 2–Exercise Solutions

semester obtained, considering that the net income obtained, at the end of the
Was it reapplied at the same rate for the remainder of the period in the first semester?

Solution

The net income in each semester from the initial investment is given by:
J l C i   1 t  100000
 0.15 1 1 0.015 
15000 0.985 14775

The net income in the 2nd semester, from the reinvested net income, is given
by:
J l C I    1 t   14775 0.15 1 
1 0.015 2183.01

The diagram below represents the cash flow of the investment.

The net rate is given by:

131733.01
1
100000
il 0.1587 15.87% per annum.
2

Note that the reinvestment of the income in the first semester results in interest.
about interest, caused the net semiannual rate, for the consolidated operation,
would be greater than the gross semiannual rate.

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 Chapter 2 – Exercise Solutions

You went to buy a refrigerator and the store offered you 4 options.
R$ 1,800.00 in cash.
R$ 300.00 in cash plus 3 consecutive monthly installments of R$ 600.00.
R$ 500.00 upfront plus 3 monthly and successive installments of R$ 500.00.
8 monthly and successive installments of R$ 275.00, with a 3-month grace period.
What is the best option for you, the buyer, considering a simple interest rate of
4% a.m. and the focal date on the purchase date?

Solution
The best option for the buyer is the one with the lowest present value, that is, in
purchase date (reference date 0). Calculating the current values of the options we have:
a) Since the value is for cash,VP
a
R$1,800.00
600 600 600
b)VP b 300   R$1,968.19
1 0.04 1 0.04 2 1 0.04 3

500 500 500

VP 500
c
  R$1,890.16
1 0.04 1 0.04 2 1 0.04 3

275 275 275 275 275

VPd     
1 0.04 3 1 0.04 4 1 0.04 5 1 0.04 6 1 0.04 7
d)
275 275 275
   R$1,755.36
1 0.04 8 1 0.04 9 1 0.04 10

Logo the best option for the buyer is d.

12) Thinking about the year-end parties, Fabio intends to deposit R$ 2,000.00 on 05/06 and
R$ 3,000.00 on 09/05. If the bank used will pay simple interest at a rate of 10% per quarter,
What will be the amount Fabio can withdraw on 12/05?

Solution
S 2000 1 0.10 2 3000
  1
1 0.10 R$ 5,700.00

13) What is the exact simple interest resulting from an investment of R$500.00, at an interest rate of 18% per year?

undertaken from January 4, 2006 to March 25, 2008?

Solution

There are 80 days between the dates. Therefore:

C I n500 0.18 80
J R$19.73
365 365

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 Chapter 2–Exercise Resolution

14) The cash flow of Industry Zé Bolinha shows payments of R$ 120,000.00 and
R$ 80,000.00, respectively, from today to 3 and 9 months. Anticipating difficulties, the manager
finance, Dr. Araújo, tries to negotiate with the creditor institution this debt, in the form of
two equal payments due from today to 12 and 15 months. Assuming that this renegotiation
If the interest rate is 5% per annum and the focal date is today, what is the value of the new payments?

Solution

The current value of the original payments must be equal to the current value of the payments.
proposed.

120000 80000 P P
 
1 0.05 1 1 0.05 3 1 0.05 4 1 0.05 5

114,285.71 69565.22 0.8333P 0.80P

183850.93
1,6333P 183,850.93 P R$112,564.09
1.6333

15) A person owes R$ 50,000.00 in 2 months, R$ 100,000.00 in 3 months and

R$20,000.00 in 4 months. Wishing to settle these debts with a single payment.
in a month, what should be its value, considering an interest rate
simple interest of 10% per year and focal date today?

Solution
The sum of the current values of the original payments must be equal to the present value of
proposed payment.

50000 100000 20000 P

 
2 3 4 1
1 0,1 1 0,1 1 0,1 1 0,1
12 12 12 12

49180.33 97560.98 19354.84 0.9231P

166096.15
0.9231P 166096.15 P R$179.937,50
0.9231

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 Chapter 2 - Exercise Resolution

16) Imagine a case of a fixed income security, with an issuance valueEqual to

R$12,000.00, with a maturity period of one year, gross yield rate
ib 10% per annumand tax charged posthumously at a rate of 10% on the income;
with the title being traded at a 7% discount, with the gross rateibinciding on the
full face value of the bond. It is requested to determine the net annual return rate if:
a) The tax does not take into account the discount.
b) The tax takes into account the discount.

Solution
a) If the tax does not take the discount into account.

R E ib 12000 0,1 1200

T t R 0,1 1200 120
N E1 i T b 12000 1 0.1 120
 13080

V E1 
12000 0.93 11160
N V13080 11160
il 0.1720 or 17.20% per annum.
n V 11160
you
 1 t i b  1 0.10  0,1 0.07
il 0.1720 or 17.20% per annum
1 1 0.07

b) If the tax takes into account the discount.

As a general rule, the tax rate tapplies to the so-called accounting profit, LC, which is equal to the sum of the
revenue minus the sum of expenses. In this case, we will have:

LC E1 i E1b And I  b 

T
Logo, we will have t E  I b Consequently, the cash flow that characterizes the
operation is given by:

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 Chapter 2 - Exercise Resolution

Logo, being N E 1 1 t i t  b

V eE(1 ) we will have:

T t LC t E b i  0,1 12000 0.17 204

N E  1 i Tb  1,1 204  12996
12000
V 
1 E 0.93 12000 11160
N V12996 11160
Il 0.1645 or 16.45% per annum
n V 11160

or
 1 t   ib   1 0.1   0.1 0.07 
il 0.1645 or 16.45% per annum
1 1 0.07

17) Be a financial institution that is issuing bonds with a term of 1 year and rates
gross profitability of 18% per year.
a) If income tax is charged on redemption at a rate of 15%, what will be the
annual net return rate for the investor?
b) Assuming that the investor demands a net return rate of 30% per year,
how much should be granted as a discount if the discount is considered or not for purposes
of income tax?
Solution
a)
N E1 i T;V
b E
R E ib 0.18E
T t R 0.15 0.18E 0.027E
N E1 i T b E1 0.18 0.027E
  1,153E
N V1,153E E
il 0.153 15.3% per annum
n V E
you
il 1 t i  0.85
b
0.18 0.153 15.3% per annum
b) Discount not considered for income tax purposes

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 Chapter 2 - Exercise Resolution

N  i T;V
E1 b 1 E  
R E Ib 0.18E
T t R 0.15 0.18E 0.027E
N E1 i T b E1 0.18 0.027E
  1,153E
N V 1,153E 1 E 1,153 1  
il
n V  1  E  1 
1,153 1   0.147
0.3 0.3 0.3 0.153 0.1131 or 11.31%
 1  1.30
Discount considered for income tax purposes
N E1 i T;V
b 1 E  
LC E1 i 1 b   bE E i Eb And I 
T t 
And
b
I  0.15 E 0.18  
E0,027 0.15 
N E1 i T b E1 0.18 E0.027
 
0.15  E1,153 0.15  
N V 
E1,153 0.15   1  E 1,153 0.15  1  
il
n V  1  E  1 
0.153 0.85 0.153 0.85
il 0.3
 1   1 
0.147
0.3 0.3 0.153 0.85 0.1278 12.78%
1.15
Certain individual, who usually makes short-term loans, charging interest.
simple, has the following five notes in its Investment Portfolio
promissory notes:
a) The first, with a face value of R$ 2,000.00, term of 6 months at simple interest
of 4% per month, dated 2 months before today's date.
b) The second, with a face value of R$ 1,000.00, term of 8 months at simple interest
60% per annum, dated 2 months before today's date.
c) The third one with a nominal value of R$ 1,500.00, maturing in 3 months from today.
d) The fourth with a nominal value of R$ 3,000.00, maturing in 6 months from today.
e) The bond with a nominal value of R$ 2,000.00, maturing in 8 months from today.
Having the individual received the proposal to sell the five promissory notes.
In question, for R$ 7,400.00, payable in full, should or should not accept the proposal if,
on today's date, can you make loans charging simple interest rate of:
i. 6% per month
ii. 10% per month

Solution
Calculating the par value of promissory notes

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 Chapter 2–Exercise Solutions

Na 2000 1 0.04 6 2480,

 four months after today's date (0)
8
N b 1000 1 0.6 1400, six months after today's date (0)
12
Nc 1500, three months after today's date (0)
N d 3000, six months after today's date (0)
N e 2000, eight months after today's date (0)

I. 6% monthly rate, focal date today

The current value of the promissory note portfolio is:

2480 1400 1500 3000 2000
VP     7857.83
1 0.06 4 1 0.06 6 1 0.06 3 1 0.06 6 1 0.06 8

Since R$ 7,857.83 is greater than the offered amount, R$ 7,400.00, it should be declined.
offer.

II. 10% monthly rate, focal date today

The current value of the promissory note portfolio is:
2480 1400 1500 3000 2000
VP     6786.39
1 0.10 4 1 0.10 6 1 0.10 3 1 0.10 6 1 0.10 8
Since R$ 6,786.39 is less than the offered amount, R$ 7,400.00, it should be accepted.
offer.

A certain person, when buying a new car priced at R$ 20,000.00, had their car
Used accepted as down payment. The remaining sale price will be paid in five installments.
monthly payments of R$ 2,600.00, the first due one month after purchase. Knowing that the
the simple interest rate of the financing is 2% per month, what was the value of the car appraisal
used?

Solution
On today's date, the value equation is:
2600 2600 2600 2600 2600
20000 Vused    
1 0.02 1 1 0.02 2 1 0.02 3 1 0.02 41 0.02 5

20000 Vused 2549.02 2500 2452.83 2407.41 2363.64 12,272.90

Vused 20000 12272.90 R$ 7,727.10

20) An investment at a simple interest rate over a period of 5 months yields interest at the rate
of 22% per annum and pays income tax equal to 20% of the interest. The tax is paid upon redemption.
What is the net amount of an investment of R$8,000.00?

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 Chapter 2 - Exercise Resolution

Solution

5
J C i n 8000 0.22 733.33
12
T t J 0.2 733.33 146.67
Sl C J T  8000 733.33 146.67 R$ 8,586.66

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