Question

Calculate simple interest (exact) and Maturity valueA simple interest note has a face value of $7000, a rate of 5%, and a term of 280 days.

Answer 1

Interest = $268.49

Maturity value = $7268.49

Step-by-step explanation:

In this case, we know

Principle = $7000

rate = 5% = 0.05

Time = 280 days

Since we need the time in years, we need to convert 280 days to years as

`280\text{ days }*\frac{1\text{ year}}{365\text{ days}}=0.77\text{ years}`

Then, we can calculate the interest as

Interest = Principle x rate x time

Interest = $7000 x 0.05 x 0.77

Interest = $268.49

Now, the maturity value is

Maturity value = Principal + Interest

Maturity value = $7000 + $268.49

Maturity value = $7268.49

Therefore, the answer is

Interest = $268.49

Maturity value = $7268.49