Chapter 10.I, Problem 42RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Solve the following word problems. Round to the nearest cent when necessary.

On April 12, Michelle Lizaro borrowed $5,000 from her credit union at

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?

**(a)**

To determine

**To calculate:** The amount of interest on the loan by ordinary interest method, if Michelle borrowed $5000 from credit union at the interest rate of 9% for 80 days on April 12.

Explanation

**Given Information:**

Michelle borrowed $5000 from credit union at the interest rate of 9% for 80 days on April 12.

**Formula used:**

The simple interest formula is,

Or,

Where,

To change the time in the year from the day, following formula used:

**Calculation:**

Consider the provided information,

Michelle borrowed $5000 from credit union at the interest rate of 9% for 80 days on April 12

**(b)**

To determine

**To calculate:** The maturity value of the loan, if Michelle borrowed $5000 from credit union at the interest rate of 9% for 80 days on April 12.

**(c)**

To determine

**To calculate:** The maturity date of the loan, if Michelle borrowed $5000 from credit union at the interest rate of 9% for 80 days on April 12.

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