Question

Will Smith obtained a $2,000 loan to purchase a computer. His interest rate is 7% ordinary interest for 108 days. How much interest does he owe and what is the maturity value of the loan?

Answer 1

Interest earned
I=prt
I=2000*0.07*(108/360)
I=42

Maturity value
A=42+2000=2042

Answer 2

Hence,

Interest he owe= $ 42.

Maturity Value= $ 2042

Explanation:

Will Smith obtained a $2,000 loan to purchase a computer.

His interest rate is 7% ordinary interest for 108 days.

So, we will use the simple interest(I) formula to calculate the interest as:

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

Here we have:

P=$ 2,000

R=7

T=108 days=108/360 years.

Hence,

`I=(2000* 7* (108)/(360))/(100)\\\\\\I=(2000* 7* 108)/(100* 360)\\\\\\I=42`

Hence, the interest he owe= $ 42.

Also maturity value= P+I

=2000+42

= $ 2042

Hence,

Interest he owe= $ 42.

Maturity Value= $ 2042