Question

Calculate the simple interest and maturity value.

Do not round intermediate calculations. Round your answers to the nearest cent.
$
Principal
19,200
Interest rate
6 1/4 %
Time
16 month
Simple interest
Maturity value

Answer 1

To calculate the simple interest and maturity value, use the formula: Simple Interest = Principal × Rate × Time. Given the principal, rate, and time, convert the rate to decimal form, substitute the values into the formula, and calculate the simple interest. The maturity value is found by adding the principal and the simple interest.

Step-by-step explanation:

The simple interest can be calculated using the formula:

Simple Interest = Principal × Rate × Time

Given:

• Principal = $19,200
• Interest Rate = 6 1/4% = 6.25%
• Time = 16 months

Step 1: Convert the interest rate to decimal form: 6.25% = 0.0625

Step 2: Substitute the values into the formula:

Simple Interest = $19,200 × 0.0625 × (16/12)

Step 3: Calculate the simple interest:

Simple Interest = $400

The maturity value is the sum of the principal and the simple interest:

Maturity Value = Principal + Simple Interest

Maturity Value = $19,200 + $400

Maturity Value = $19,600