Question

Manuel Fraser’s bank granted him a single-payment loan of $9,650. He agreed to repay the loan in 146 days at an ordinary interest rate of 7.75%. What is the maturity value of the loan?

Answer 1

A=9650(1+0.0775*146/360)
A=9953.30

Answer 2

Maturity Value=$ 9953.305

Explanation:

Manuel Fraser’s bank granted him a single-payment loan of $9,650.

He agreed to repay the loan in 146 days at an ordinary interest rate of 7.75%.

i.e. we have:

P=$ 9650

R=7.75

T=146 days= 146/360 year.

Now the interest(I) on the loan is given by the formula as:

`I=(P* R* T)/(100)`

Hence, on putting the values of P, R and T in the formula of the interest we obtain:

`I=(9650* 7.75* (146)/(360))/(100)\\\\\\I=(9650* 7.75* 146)/(360* 100)\\\\I=(10918975)/(36000)\\\\I=303.305`

Hence, the maturity value is:

Maturity value=P+I

= 9650+303.305

= $ 9953.305

Hence,

Maturity Value=$ 9953.305