Question

Linguistic and cultural specialist nyota takes out a 180 day, 18,500 loan at 4.5% ordinary interest to travel and learn more about the world. What is the maturity value of the loan?

Answer 1

The formula in computing the maturity value of the loan is:

MV = Principal + Interest

Interest = Principal (rate) (time in years)

Interest = 18,500 (4.5%) (180/360)

Take note that the 180 days is divided by 360 because time should be in years.

Interest = 18,500 (4.5%) (.5)

Interest = 416.25

MV = 18,500 + 416.25

Maturity value of the loan = 18,916.25