Devon takes out a loan of $1,500, at $6 \frac { 1 } { 2 } \%$ simple interest, for 56 months. What is the maturity value of the loan? (Round to the nearest cent)
A) $1,955.00
B) $1,550.75
C) $2,100.25
D) $2,500.50

Question

Quizplus · Accepted Answer

The maturity value of the loan is calculated using the formula for simple interest: $I = P \times r \times t$, where $I$ is the interest, $P$ is the principal amount ($1,500), $r$ is the annual interest rate (6.5% or 0.065 as a decimal), and $t$ is the time in years. For 56 months, $t = \frac{56}{12}$ years. So, $I = 1500 \times 0.065 \times \frac{56}{12}$. The interest $I = 455$. The maturity value is $P + I = 1500 + 455 = 1955$.

Devon Takes Out a Loan of $1,500, At 612%6 \frac { 1 } { 2 } \%621​%

Devon Takes Out a Loan of $1,500, At $6 \frac { 1 } { 2 } \%$