Question

Alexa took out a $42,000 loan to remodel a house. The loan rate is 8.3% simple interest per year and will be repaid in six months. What is the maturity value that is paid back ?

Answer 1

Answer: The maturity value is $43743

Step-by-step explanation:

The formula for determining simple interest is expressed as

I = PRT/100

Where

I represents interest paid on the loan.

P represents the principal or amount that was taken as loan.

R represents interest rate.

T represents the duration of the loan in years.

From the information given,

P = 42000

R = 8.3

T = 6 months = 6/12 = 0.5 years

I = (42000 × 8.3 × 0.5)/100 = $1743

The maturity value is the total amount paid after the duration of the loan. It becomes

42000 + 1743 = $43743