Find the maturity value of a loan of $2,900.00 after two years. The loan carries a simple interest rate of 7.7% per year The maturity value of a loan is $. (Round to the nearest cent as needed.) H-4
Find the maturity value of a loan of $2,900.00 after two years. The loan carries a simple interest rate of 7.7% per year The maturity value of a loan is $. (Round to the nearest cent as needed.) H-4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![### Simple Interest Calculation
#### Problem Statement:
**Find the maturity value of a loan of $2,900.00 after two years. The loan carries a simple interest rate of 7.7% per year.**
---
#### Solution:
To find the maturity value of the loan, we need to calculate the interest earned over the given period and add it to the principal amount.
**Step-by-Step Solution:**
1. **Principal Amount (P):** $2,900.00
2. **Time Period (T):** 2 years
3. **Annual Interest Rate (R):** 7.7%
The formula to calculate simple interest is:
\[ \text{Interest} (I) = P \times R \times T \]
4. Convert the interest rate from a percentage to a decimal for calculation:
\[ R = 7.7\% = \frac{7.7}{100} = 0.077 \]
5. Substitute the values into the formula:
\[ I = 2900 \times 0.077 \times 2 \]
6. Perform the multiplication:
\[ I = 2900 \times 0.154 = 446.60 \]
7. The total interest earned is $446.60.
8. **Maturity Value (A):** This is the sum of the principal amount and the interest earned.
\[ A = P + I = 2900 + 446.60 = 3346.60 \]
---
**The maturity value of the loan is $3,346.60.**
(Round to the nearest cent as needed.)
![Image not provided in the explanation]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff3aaa20b-aa03-431c-a209-6c3af75044ad%2Fbd83f947-9d40-463a-beb2-ebc16a7d5f71%2Fvh623pu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Simple Interest Calculation
#### Problem Statement:
**Find the maturity value of a loan of $2,900.00 after two years. The loan carries a simple interest rate of 7.7% per year.**
---
#### Solution:
To find the maturity value of the loan, we need to calculate the interest earned over the given period and add it to the principal amount.
**Step-by-Step Solution:**
1. **Principal Amount (P):** $2,900.00
2. **Time Period (T):** 2 years
3. **Annual Interest Rate (R):** 7.7%
The formula to calculate simple interest is:
\[ \text{Interest} (I) = P \times R \times T \]
4. Convert the interest rate from a percentage to a decimal for calculation:
\[ R = 7.7\% = \frac{7.7}{100} = 0.077 \]
5. Substitute the values into the formula:
\[ I = 2900 \times 0.077 \times 2 \]
6. Perform the multiplication:
\[ I = 2900 \times 0.154 = 446.60 \]
7. The total interest earned is $446.60.
8. **Maturity Value (A):** This is the sum of the principal amount and the interest earned.
\[ A = P + I = 2900 + 446.60 = 3346.60 \]
---
**The maturity value of the loan is $3,346.60.**
(Round to the nearest cent as needed.)
![Image not provided in the explanation]
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