Question

using the formula mv=p(1+rt), determine the maturity value of a loan with the following parameters: principal= 10,985 rate=9 1/2% time= 11 months

Answer 1

So here we have the formula:

`mv=p(1+rt)`

Where mv is the maturity value, p is the principal amount, r is the rate and t is the time in months.

If we replace our values:

p = 10,985

r = 9 1/2%

t = 11

First of all, remember that 9 1/2 can be written as:

`9(1)/(2)=(19)/(2)=9.5`

To find the maturity value with the given data, we should replace in the equation as follows:

`mv=10,985(1+(9.5)/(100)(11))`

Remember that 9.5% = 9.5/100

So, the only thing we have to do now is to operate:

`\begin{gathered} mv=10,985(1+1.045) \\ mv=10,985(2.045) \\ mv=22464.3 \end{gathered}`

And that's the maturity value.