Question

4. Benson Automotive borrows $2,000,000 at 9.25% from a bank to buy land to build a building for a new dealership. Given that the loan is for 9 months, find the maturity value

Answer 1

Answer:

The maturity value is $2,006,937.50

Step-by-step explanation:

Parameters:

Prinicpal, P = $2,000,000

Rate, R = 9.25%

Time, T = 9 months

The maturity value is given as the sum of the interest and principal

Interest, I = PRT/100

= 200000 * 9.25 * 0.75/100

= $6, 937.50

Maturity Value = $2,000,000 + $6,937.50

= $2,006,937.50