Question

Use the formula A = P(1 + rt) to calculate the maturity value of the simple interest loan. (Round your answer to two decimal places.)P = $2600, r = 8.8%, t = 5 months

Answer 1

Step 1:

Given data

`\begin{gathered} P\text{ = \$2600} \\ r\text{ = 8.8\% = }(8.8)/(100)\text{ = 0.088} \\ t\text{ = 5 months = }(5)/(12)\text{ per annum} \end{gathered}`

Step 2:

Substitute the values in the amount formula

Amount = P + Prt = P(1 + rt)

`\begin{gathered} A\text{ = P(1 + rt)} \\ A\text{ = 2600 }*\text{ ( 1 + 0.088}*(5)/(12)) \\ A\text{ = 2600 }*\text{ ( 1 + }(0.088*5)/(12)) \\ A\text{ = 2600 }*\text{ ( 1 + 0.037)} \\ A\text{ = 2600 }*\text{ 1.037} \\ A\text{ = \$2696.2} \end{gathered}`