Question

Ruth and Juan Dimas would like yo borrow $2,600 for 90 days to pay their real estate tax. State savings and Loan charges 7.25 percent ordinary interest while security bank charges 7.5 percent exact interest. What’s the maturity value of each loan?

Answer 1

The maturity value of the loan from State Savings and Loan with a 7.25% ordinary interest rate is $2,648.65, while the maturity value of the loan from Security Bank with a 7.5% exact interest rate is $2,648.75.

Step-by-step explanation:

Ruth and Juan Dimas are looking to borrow $2,600 for 90 days to pay their real estate tax, with two different interest rates offered by two banks. To find the maturity value of each loan, we need to calculate the interest for each and then add it to the principal amount of $2,600.

For the loan from State Savings and Loan at 7.25% ordinary interest:
Interest = Principal × Rate × Time = $2,600 × 0.0725 × (90/365) = $48.65 approximately.
Maturity value = Principal + Interest = $2,600 + $48.65 = $2,648.65

For the loan from Security Bank at 7.5% exact interest:
Interest = Principal × Rate × Time = $2,600 × 0.075 × (90/360) = $48.75 approximately.
Maturity value = Principal + Interest = $2,600 + $48.75 = $2,648.75