Question 1193159: On March 5, 2016, Blake borrowed $79,650 from Equitable Bank at 4.09% p.a; he settled the loan on June 4, 2019.
a) How much was the maturity value of the loan?
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b) How much was the amount of interest charged on the loan?
Answer by CPhill(1959)   (Show Source):
You can put this solution on YOUR website! **a) Calculate the Maturity Value**
* **Principal Amount:** $79,650
* **Annual Interest Rate:** 4.09%
* **Time Period:** March 5, 2016 to June 4, 2019 (approximately 3 years and 3 months)
**Calculate the Total Interest:**
1. **Convert the annual interest rate to a decimal:** 4.09% = 0.0409
2. **Calculate the interest for one year:** $79,650 * 0.0409 = $3,257.85
3. **Calculate the interest for 3 years:** $3,257.85 * 3 = $9,773.55
4. **Calculate the interest for 3 months (assuming 30 days per month):** $3,257.85 * (3/12) = $814.46
5. **Calculate the total interest:** $9,773.55 + $814.46 = $10,588.01
**Calculate the Maturity Value:**
* Maturity Value = Principal + Total Interest
* Maturity Value = $79,650 + $10,588.01 = $90,238.01
**Therefore, the maturity value of the loan is approximately $90,238.01.**
**b) Amount of Interest Charged**
* **The amount of interest charged on the loan is $10,588.01.**
**Note:** This calculation assumes simple interest. If the loan accrued compound interest, the calculations would be slightly different.
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