Solve the problem. Round dollar amounts to the nearest cent. Use ordinary interest unless otherwise indicated.
-Frank borrowed $85,633 from the bank at 9.4% for 170 days to expand his bike shop. Find the maturity value.
A)$89,487.69
B)$89,434.15
C)$89,161.55
D)$89,602.62

Question

Quizplus · Accepted Answer

The maturity value of a loan can be calculated using the formula for ordinary interest: $I = P \times r \times t$, where $I$ is the interest, $P$ is the principal amount, $r$ is the annual interest rate, and $t$ is the time in years. For ordinary interest, a year is considered to have 360 days. The maturity value is then the sum of the principal and the interest ($P + I$).Given:- Principal ($P$) = $85,633- Annual interest rate ($r$) = 9.4% or 0.094 (as a decimal)- Time ($t$) = 170 days = $\frac{170}{360}$ yearsFirst, calculate the interest:$I = 85,633 \times 0.094 \times \frac{170}{360}$$I = 85,633 \times 0.094 \times 0.4722$$I = 85,633 \times 0.0443868$$I = 3,801.15$Then, calculate the maturity value:Maturity Value = Principal + Interest = $85,633 + $3,801.15 = $89,434.15Therefore, the correct answer is B) $89,434.15.

Solve the Problem