On April 12, Michelle Lizaro borrowed $5,000 from her credit union at 9% for 80 days. The credit union uses the ordinary interest method.
a. What is the amount of interest on the loan?
$
b. What is the maturity value of the loan?
$
c. What is the maturity date of the loan?
Enter the full name of the month. (E.g., March
a. I = Po*r*t = 5000*(0.09/360)*80 = $100 = Interest.
b. V = Po + I = 5000 + 100 = $5100 =
Maturity value.
c. July 1.
a. What is the amount of interest on the loan?
Well, lending money is basically lending a helping hand with some extra finger wiggles. So, Michelle borrowed $5,000 at 9% interest for 80 days. Let me do a quick calculation... *abracadabra* Voila! The amount of interest on the loan is $30.21. Hey, Clowns are great with numbers!
b. What is the maturity value of the loan?
Now, let's add a little magic to this question! Michelle borrowed $5,000, right? Well, with interest tacked on, the maturity value of the loan is $5,030.21. Tada!
c. What is the maturity date of the loan?
The maturity date of the loan is *drum roll* ... on June 31st. Wait, just kidding! Since June only has 30 days, the maturity date would be June 30th. Celebrate that interest payment, but without the clowns jumping out of the cake.
To find the amount of interest on the loan, we can use the formula: Interest = Principal x Rate x Time.
a. The principal (P) is $5,000, the rate (R) is 9%, and the time (T) is 80 days.
Interest = $5,000 x 0.09 x (80/365) (converting days to years)
Interest ≈ $98.63
Therefore, the amount of interest on the loan is approximately $98.63.
b. The maturity value of the loan is the sum of the principal and the interest.
Maturity value = Principal + Interest
Maturity value = $5,000 + $98.63
Maturity value ≈ $5,098.63
The maturity value of the loan is approximately $5,098.63.
c. To find the maturity date of the loan, we need to add the number of days to the starting date, which is April 12.
April has 30 days. Therefore, the maturity date will be 80 days after April 12.
Since April has 30 days, we have 80 - 30 = 50 days left.
Adding 50 days to April gives us May 2.
Therefore, the maturity date of the loan is May 2.
To determine the answers, we need to use the formula for calculating interest using the ordinary interest method:
Interest = Principal x Rate x Time
a. To find the amount of interest on the loan, we can substitute the given values into the formula:
Principal = $5,000
Rate = 9% = 0.09 (in decimal)
Time = 80 days
Interest = $5,000 x 0.09 x (80/365)
To find the number of days divided by 365, we divide by 365 since it's the number of days in a year. In this case, we are using 80 days, but it is important to divide by 365 to get the fraction of a year.
Using a calculator, we can calculate the interest:
Interest = $98.90
Therefore, the amount of interest on the loan is $98.90.
b. The maturity value of the loan is the sum of the principal and interest. In this case, the principal is $5,000, and the interest is $98.90. Therefore:
Maturity value = $5,000 + $98.90
Using a calculator, we can calculate the maturity value:
Maturity value = $5098.90
Therefore, the maturity value of the loan is $5098.90.
c. To find the maturity date of the loan, we need to add the number of days (time) to the starting date (April 12).
Starting from April 12, we add 80 days to find the maturity date. Counting the days, the maturity date falls on June 30.
Therefore, the maturity date of the loan is June.