Question

Carrie houghtaling's bank granted her a single payment loan of 4,000 for 80 days at 11 percent ordinary interest. What is the maturity value of the loan

Answer 1

4,100

Explanation:

The maturity value can be calculated using the following formula:

MV= P(1+r)^n

P: principal amount= 4,000

r: rate of interest= 11%/360= 0.0305%

n: time until maturity

MV= 4,000(1+0.000305)^80

MV= 4,000*1.025

MV= 4,100

The maturity value of the loan is 4,100.