Final answer:
To calculate the maturity value of a $1,600 loan at 6% interest for 42 months, first find the interest by multiplying the principal by the annual rate and the time in years. The interest comes to $336. Add this to the principal to get a maturity value of $1,936.
Step-by-step explanation:
To calculate the maturity value (MV) of Annys loan, we can use the formula MV = P + I where P is the principal amount of the loan, and I is the total interest. The original loan amount (P) is $1,600 and the annual interest rate is 6%. Since interest is typically given on an annual basis, and the loan period is 42 months, first we should convert the loan period into years, by dividing the number of months by 12. Thus, 42 months is equivalent to 3.5 years.
Interest (I) can be calculated by:
I = P × rate × time = $1,600 × 0.06 × 3.5 = $336
Now, using the formula MV = P + I,
MV = $1,600 + $336 = $1,936
Therefore, the maturity value of the loan after 42 months will be $1,936.