Question

Calculate simple interest (ordinary) and maturity valueProblem A simple interest note has a face value of 12,000, a rate of 8%, and a term of 1 year.

Answer 1

Solution

Given

Face value(pricipal), p = 12,000

Rate, r = 8%

Number of years, t = 1

Simple interest = prt/100

$\begin{gathered} Simple\text{ interest =}\frac{12000\text{ x 8 x 1}}{100}\text{ = 960} \\ \end{gathered}$

The simple interest = 960

Maturity value = Principal + interest

= 12,000 + 960

=12,960