Tyler has a single-payment loan of $3,200. He is paying back the loan in 92 days with an ordinary interest rate of 8.75%. What is the interest owed? What is the maturity value of the loan?

Step-by-step explanation:

We would apply the formula for determining simple interest which is expressed as

I = PRT/100

Where

I represents interest paid on the loan.

P represents the principal or amount taken as loan

R represents interest rate

T represents the duration of the loan in years.

From the information given,

P = $3200

R = 8.75%

T = 92 days

Ordinary interest is calculated on the basis of 360 days in a year. Converting 92 days to year, it becomes

92/360 = 0.256 year

Therefore,

I = (3200 × 8.75 × 0.256)/100

I = $71.68

the interest owed is $71.68

the maturity value of the loan is

3200 + 71.68 = $3271.68

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