On May 23, Samantha Best borrowed $4,000 from the Tri City Credit Union at 13% for 160 days. The credit union uses the exact interest method.What was the maturity value of the loan?
V=4000(1+.13 )^(160/365)== 4219.96015
To find the maturity value of the loan, we need to calculate the interest and add it to the principal amount.
Step 1: Calculate the interest.
The formula for calculating simple interest is:
Interest = Principal * Rate * Time
Here, the principal amount is $4,000, the interest rate is 13% (which is equivalent to 0.13 as a decimal), and the time is 160 days (expressed as a fraction of a year).
So, the interest can be calculated as:
Interest = $4,000 * 0.13 * (160/365)
Step 2: Calculate the maturity value.
The maturity value is calculated by adding the interest to the principal amount.
Maturity Value = Principal + Interest
Therefore, the maturity value of the loan is:
Maturity Value = $4,000 + (Interest calculated in Step 1)
Now you can substitute the values from Step 1 into the formula to calculate the maturity value of the loan.