What is the maturity value of the following loan? Use MV = P(1 + RT) to find the maturity.
Principal=$120,740, Rate=11¾ and Time= 7 months
What is the maturity value of the following loan? Use MV = P(1 + RT) to find the maturity.
Principal=$120,740, Rate=11¾ and Time= 7 months
To find the maturity value of a loan using the formula MV = P(1 + RT), we need to substitute the given values. In this case, the principal (P) is $120,740, the rate (R) is 11¾ (11.75% expressed as a decimal), and the time (T) is 7 months.
First, we need to convert the percentage rate into a decimal by dividing it by 100:
Rate = 11¾% = 11.75 ÷ 100 = 0.1175
Next, we can substitute the values into the formula:
MV = P(1 + RT)
= $120,740(1 + 0.1175 × 7)
Now, we can calculate the result:
MV = $120,740(1 + 0.8225)
= $120,740(1.8225)
= $220,106.65
Therefore, the maturity value of the loan is $220,106.65.