Problema Solution
Patricia borrowed $58,400 from Northwest Savings and Loan for 220 days. Assume that the saving and loan charges Patricia Stewart an annual interest rate of 8% for this loan. What is the maturity value?
Answer provided by our tutors
P = $58,400 principal amount (the initial amount)
r = 0.08 annual rate of interest (as a decimal)
t = 220/360 years number of years (if we use the 360 days in a year)
A = future value or maturity value
since the compounding in annual and the time period is less that 1 year for the interest we have:
I = P*r*t
I = 58400*0.08(220/360)
I = $2,855
the maturity value is
A = I + P
A = 58,400 + 2,855
A = $61,255.