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14 October, 03:58

What are the amounts of interest and maturity value of a loan for 150,000 at 6 1/2% simple interest for 3 years?

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  1. 14 October, 06:48
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    The formula for computing the amount of simple interest is:

    I = Prt

    Where P = principal amount of the loan

    r = interest rate of the loan

    t = duration of the loan

    Substituting the amounts in the formula,

    I = (150,000) (6.5%) (3)

    = 29,250

    To compute for the maturity value, you have to add the interest to the principal amount:

    Maturity value = 150,000 + 29,250 = 179,250
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