What is the maturity value of a 6-month loan for $2,500 at 13% ordinary simple interest?
A) $2,642.47
B) $2,662.50
C) $160.27
D) $162.50

Question

Quizplus · Accepted Answer

The maturity value of a loan is calculated by adding the interest earned to the principal amount. The formula for simple interest is $I = P \times r \times t$, where $I$ is the interest, $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years. For a $2,500 loan at 13% interest for 6 months (0.5 years), the interest is $2500 \times 0.13 \times 0.5 = 162.50$. Adding this interest to the principal gives the maturity value: $2500 + 162.50 = 2662.50$.

What Is the Maturity Value of a 6-Month Loan for $2,500