Devon takes out a loan of $1,500, at simple interest, for 56 months. What is the maturity value of the loan? (Round to the nearest cent)

Answer 1

To find the maturity value of the loan, we need to calculate the interest accrued over 56 months and add it to the principal amount.

The formula to calculate simple interest is: Interest = Principal × Rate × Time.

Given:
Principal (P) = $1,500
Time (t) = 56 months
Rate (r) = It is not given, so we assume it to be a percentage.

Let's assume the rate of interest is 5%.

So, Rate (r) = 5%.

Now, let's calculate the interest.
Interest = Principal × Rate × Time
Interest = $1,500 × 0.05 × 56
Interest = $4,200

Next, let's calculate the maturity value of the loan by adding the interest to the principal.
Maturity Value = Principal + Interest
Maturity Value = $1,500 + $4,200
Maturity Value = $5,700

Therefore, the maturity value of the loan is $5,700.

Answer 2

Legitimate Financial Services made a loan at 9.75% interest for 254 days. If the amount of interest was $270.50, use the exact interest method to find the amount of principal borrowed. (Round to the nearest whole dollar amount)

Answer 3

To find the amount of principal borrowed using the exact interest method, we'll use the formula: Interest = Principal × Rate × Time.

Given:
Interest (I) = $270.50
Rate (r) = 9.75%
Time (t) = 254 days

Let's first convert the rate from a percentage to a decimal by dividing by 100:
Rate (r) = 9.75% ÷ 100 = 0.0975

Now we can rearrange the formula to solve for the principal (P):
Principal = Interest / (Rate × Time)

Plugging in the values:
Principal = $270.50 / (0.0975 × 254)

Principal ≈ $270.50 / 24.705

Principal ≈ $10.97 (rounded to the nearest whole dollar amount)

Therefore, the amount of principal borrowed was approximately $11.