Chapter 10.II, Problem 35RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Pamela Boyd borrowed $20,000 at 6.5% ordinary interest for 150 days. On day 30 of the loan, she made a partial payment of $8,000. What is the new maturity value of the loan?

To determine

**To calculate:** The maturity value of loan taken by Pamela Boyd where principal amount of loan is

Explanation

**Given Information:**

Principal amount of loan is

**Formula used:**

Compute the time using ordinary interest method as,

The formula to compute simple interest is,

Where, *I* is the amount of interest, *P* is the principal amount, *R* is the rate of interest, and *T* is the time duration.

The formula to calculate Maturity value is,

Where, *MV* is Maturity value, *P* is Principal Amount, *R* is the rate of interest, and *T* is the time duration.

**Calculation:**

Consider that principal amount is

Simplify the rate of interest as,

Compute the time using ordinary interest method as,

Substitute

Hence, rate of interest is

Out of the repayment of

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