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10 October, 00:56

Alexa took out a $42,000 loan to remodel a house. The loan rate is 8.3% simple interest per year and will be repaid in six months. What is the maturity value that is paid back?

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  1. 10 October, 02:45
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    Answer: The maturity value is $43743

    Step-by-step explanation:

    The formula for determining simple interest is expressed as

    I = PRT/100

    Where

    I represents interest paid on the loan.

    P represents the principal or amount that was taken as loan.

    R represents interest rate.

    T represents the duration of the loan in years.

    From the information given,

    P = 42000

    R = 8.3

    T = 6 months = 6/12 = 0.5 years

    I = (42000 * 8.3 * 0.5) / 100 = $1743

    The maturity value is the total amount paid after the duration of the loan. It becomes

    42000 + 1743 = $43743
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