Answer:
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
