The maturity value of a 180-day, 8.75% ordinary interest commercial loan is $83,500. Find the principal.

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asked Sep 8, 2019 64.2k views

1 Answer

Rkt · Answer 1 · 2019-09-14T20:21:14+0000

The appropriate formula for the loan value at maturity is
A = P(1 + rt)

Substituting the given numbers, we have
$83,500 = P(1 + .0875·180/360)
$83,500/1.04375 = P = $80,000

The principal is $80,000.

The maturity value of a 180-day, 8.75% ordinary interest commercial loan is $83,500. Find the principal.

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