Question

Stephen Simmons received a single payment loan for a loan for $6,200. he agreed to repay the loan and 160 days at an interest rate of 10% ordinary interest. What is the maturity value of his loan when he pays it back in 160 days. 

Answer 1

9514 1404 393

Answer:

  $6475.56

Step-by-step explanation:

The maturity value is ...

  A = P(1 +rt)

where P is the principal amount, r is the annual rate, and t is the number of years. For ordinary interest, a year is 360 days, so the number of years is 160/360 = 4/9.

The loan value is ...

  A = $6200(1 + 0.10×4/9) ≈ $6475.56

Stephen's loan has a maturity value of $6,475.56.