Question

Tao Bergolts bank granted him a single-payment loan of $4,400 at an interest rate of 12 percent. The term of the loan is 172 days. What is the maturity value of his loan at exact interest?

Answer 1

Answer: $ 14736 (approx)

Explanation:

Since, Maturity value is the amount payable to an investor at the end of a holding period of debt instrument.

And, It is defined as,
`V= P(1+r)^n`

Where, P is the principal amount,

r is the interest rate

And, n is the time period.

Here, P= $4,400 r= 12 % and n = 172/365

Thus, Maturity value for this loan,

`V = 4400(1+12)^(172/365)`

⇒V= 4400 × 3.34908932078 = 14735.9930114 ≈ 14736