Question

What will be the maturity value after seven months of $2950 earning interest at the rate of 4.5%?

Answer (Needs work shown): $3027.44

The balance after 11 months, including interest, on a loan at 9.9% is $15,379.58. What are the principal and interest components of the balance?

Answer (Needs work shown): $14,100 of principle and $1,279.58 of interest

Answer 1

a.Total interest =$2950*interest rate*Time period

=$2950*0.045*(7/12)

=$77.4375

Hence maturity value=Total interest rate+Principal

=(2950+$77.4375)

which is equal to

=$3027.44(Approx).

2.

Total interest =Principal*Interest rate*Time period

=Principal*0.099*(11/12)

Hence total future value=Principal+Total interest

15379.58=Principal+Principal*(0.099*11/12)

15379.58=Principal+0.09075Principal

15379.58=Principal(1+0.09075)

Hence Principal=15379.58/(1+0.09075)

=$14100(Approx)

Hence interest=Principal*0.099*(11/12)

=(14100*9.9%*(11/12)

=$1279.58(Approx).