Pam Wedel borrowed $15,000 to pay for her child's education at Riverside Community College. Leslie must repay the loan

at the end of 9 months in one payment with 5% interest. How much interest must Leslie pay? What is the maturity value?

LU 16-1 (1)

Interest rate is $562.5, Maturity value = $15,562.5

Explanation:

Pam borrowed $15000

$15,000 is the principal amount ... p

Nine months is the duration ... t

Interest rate is a 5% which is per year interest rate ... r

the interest for Pam will be P x rt

=15000x 5% X 9/12

=15000 x 0.05 x 0.75

=562.5

Interest rate is $562.5

maturity value = principal plus interest

=$15000 + $562.5

=$15,562.5

Maturity value = $15,562.5