Question

On May 17th Jane took out a loan for $33,000 at 6% to open her law practice office the loan will mature the following year on January 16th using the ordinary interest method what is the maturity value do on January 16th

Answer 1

$ 31050

Explanation:

Step 1 : Write the formula for calculating simple interest.

Simple Interest = P x R x T

100

P: Principal Amount-The loan taken (30,000)

R: Interest rate at which the loan is give (6)

T: Time period of the loan in years-there are 12 months in 1 year. There are 7 months from May till June (7/12)

Step 2: Substitute values in the formula

Simple Interest = 30,000 x 6 x 7/12

100

Simple Interest = $1050

Step 3: Calculate the amount due at maturity

At the maturity or the end of the time period given, the original or principal amount of the loan has to be repaid along with the simple interest.

Amount at maturity = Principal Amount + Simple Interet

Amount at maturity = 30,000 + 1050

Amount at maturity = $31050

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