Question

You get a $3,000 loan at 9% interest for 120 days. The lender uses a 365-day year. How

much will you owe on the maturity date?

Answer 1

The total amount due on the maturity date of a $3,000 loan at 9% interest for 120 days, with the interest calculated on a 365-day year, is $3,088.22.

Step-by-step explanation:

To determine the total amount you will owe on the maturity date of a $3,000 loan at 9% interest for 120 days with a lender using a 365-day year, you need to calculate the simple interest and add it to the principal amount. The formula for calculating simple interest is I = PRT, where I is the interest, P is the principal amount ($3,000), R is the annual interest rate (9% or 0.09), and T is the time in years.

First, convert the time period of 120 days into years by dividing by 365. Therefore, T = 120/365.

Next, plug the values into the formula to calculate the interest:

I = $3,000 * 0.09 * (120/365)

I = $88.22 (rounded to two decimal places)

Finally, add the interest to the principal to find out the total amount due on the maturity date:

Total amount due = Principal + Interest

Total amount due = $3,000 + $88.22

Total amount due = $3,088.22

So, on the maturity date, you will owe $3,088.22.

Answer 2

$3,088.80

Step-by-step explanation:

Note that the loan is meant for 120days , however, the interest rate quoted is on an annual basis, hence, the interest for 120 days is 2.96% ( 9%*120/365).

It is equally important to note that at maturity the loan principal and the interest accrued thus far for 120 days are repayable to the lender as computed below:

total repayment=$3000+($3000*2.96% )

total repayment=$3000+$88.80

total repayment=$3,088.80