Question

On May 3, 2020, Leven Corp. negotiated a short-term loan of $685,000. The loan is due October 1, 2020, and carries a 6.86% interest rate. Use ordinary interest to calculate the interest.
What is the total amount Leven would pay on the maturity date?

Answer 1

The total amount Leven would pay on the maturity date is; $704076

How to find maturity amount?

From 3rd May to October 1st. 2017 there are a total of 151 days.

Now, 365 days = 1 year. Thus;

151 days = 151 × 1/365 = 0.414 years

We are going to use 1 year as one term. Thus

1 year = 1T

T = 0.414

R = 6.86

P = $685000

We use formula for the Amount at the end of term:

A = P(1 + (R/100))^(T)

Where;

A = Amount at the end of term

P = Loan amount

R = Rate of interest

T = No. of terms

Plugging in the relevant values gives;

A = 685000 × (1 + (6.86/100))^(0.414)

A = $704076

==> A= 685000 × 1.02784938489=704076 $

Read more about Maturity Amount at; brainly.com/question/9099365

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