Solve the problem.
-Central Building Company borrowed $18,722 on a 94-day simple interest note to expand their business. The note carried an interest rate of 7.9%. Find the maturity value of the note.
A)$19,113.63
B)$19,108.19
C)$18,760.09
D)$18,335.81

Question

Quizplus · Accepted Answer

The formula to find the maturity value of simple interest is:

Maturity Value = Principal + (Principal x Rate x Time)

Here, Principal = $18,722
Rate = 7.9% = 0.079 (as a decimal)
Time = 94 days ÷ 365 days = 0.2575 (as a decimal)

Maturity Value = $18,722 + ($18,722 x 0.079 x 0.2575) = $19,108.19

Therefore, the best choice is B, which is the closest to the calculated maturity value. Using the formula for simple interest:
I = Prt
where I is the interest, P is the principal, r is the interest rate as a decimal, and t is the time in years.
First, we need to find the interest on the note:
I = (18,722)(0.079)(94/365) = $380.38
Then, we can find the maturity value (the amount due at the end of the term):
M = P + I = 18,722 + 380.38 = $19,102.38
Rounding to the nearest cent, we get the answer: $19,108.19

Solve the Problem. -Central Building Company Borrowed $18,722 on a 94-Day Simple Interest