Find the maturity value of a loan of $6787 after 4 months. The loan carries a simple interest rate of 14% per year.
A) $7182.91
B) $7106.39
C) $7024.55
D) $7103.73

Question

Quizplus · Accepted Answer

First, we need to find the interest accrued over 4 months:

I = P*R*T 
where P = $6787, R = 14%/year = 0.14/12/month, and T = 4/12 years = 1/3 years

I = $6787 * 0.14/12 * 1/3 = $67.82

Next, we add the interest accrued to the loan amount to find the maturity value:

M = P + I 
M = $6787 + $67.82 = $7103.73

Therefore, the maturity value of the loan after 4 months is $7103.73, which corresponds to choice D.

Find the Maturity Value of a Loan of $6787 After