Question

Juan dimes received a single payment loan from his loan for $4,000. he agreed to repay the loan in 90 days at an interest rate of 8.5% exact interest. what is the maturity value of his loan when he pays it back in 90 days. 

$83.84
$4,085.00
$4,083.84
$85.00

Answer 1

4008.5

Explanation:

Answer 2

9514 1404 393

Answer:

(c) $4,083.84

Explanation:

The amount due is ...

A = P(1 +rt)

where P is the amount borrowed, r is the annual rate, and t is the number of years. For "exact interest", we use 365 days in a year, so the number of years is 90/365.

A = $4000(1 + 0.085×90/365) ≈ $4083.84

Juan's loan will have a value of $4083.84 at maturity.