Question

Principal is $20,000, interest rate is 6 3/4, time is 9 months, what is the simple interest and maturity value?

Answer 1

What is the simple interest?

An amount earns simple interest only if the principal increases in value when interest is paid and not both the principal and the interest already accrued.

`\begin{gathered} P=\text{ \$20,000} \\ R=6.75\text{ \%} \\ T=(9)/(12) \end{gathered}`

Part a

`Simple\text{ interest=}(PRT)/(100)=(20000*9*6.75)/(12*100)=\text{ \$}1012.5`

Part b

`Maturity\text{ value=\$ 20000+\$1012.5= \$21,012.50}`

The final answer

Simple Interest =$1, 012.50

Maturity value = $ 21,012.50