Help with maturity values of loans?
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Please tell me how you got the answer, just don't give it to me. I'm trying to learn. :P
What would be the maturity value of a single-payment loan of $6,800.00. Repaying the loan in 91 days at an exact interest rate of 4.25 percent. What is the maturity value of the loan?
Thanks!
Help with maturity values of loans?Ok.
If you had a one-year loan for $1000 at 8% interest,
the maturity value would be $1000 + ($1000 * .08).
$1,000 + $80 = $1,080
Right?
Well, the above formula was easy because the loan was *exactly* one year. So how do we compute 91 days?
Easy - just take 91 divided by 365 days.
91 / 365 = 0.249315 or 0.25
0.249315 is essentially one quarter (录), right?
Let's use the simple interest formula for your problem.
Interest = Principal * Rate * Time
Interest = $6,800.00 * (.0425) * (录)
Interest = $72.25
After 91 days, the maturity value of the loan would be:
$6,800.00 + $72.25 = $6872.25
Good luck in your studies,
~ Mitch ~
P.S. - In later classes, you'll learn about compound and continuous interest, but I won't bore you about that now.
Help with maturity values of loans?Fluffy,
Thanks for the smile and stars.
Here's hoping you do well in your academic endeavors!
~ Mitch ~ Report It
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