Question

Carter Fenton is planning to borrow $1,600 from Christine

O'Brian. He is willing to pay back in 105 days at an interest
rate of 7.5% ordinary interest. What is the maturity value of his loan?

Answer 1

Maturity value = $1,635

Explanation:

Find the Future Value (FV) amount using simple interest formula;

FV= [Principal * rate * Time] + Principal

Principal = 1600

rate= 7.5% or 0.075

Time = 105 days/ 360 = 0.291667

Therefore, FV = (1600 * 0.075 * 0.291667] +1600

FV= 35+1600

FV= $1,635