The maturity value of a 5-year, 6.25% ordinary interest commercial loan is $361,593.75. Find the principal.

Question

Mathematics

Alden Pitts

4 February, 08:12

The maturity value of a 5-year, 6.25% ordinary interest commercial loan is $361,593.75. Find the principal.

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Answers (1)

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Zariah Murphy · Answer 1

The principle will be calculated as follows:

FV=P (1+r/100) ^n

P=361,593.75

r=6.25%

n=5 years

plugging the values in the formula and solving for P we shall have:

361,593.75=P (1+6.25/100) ^5

361,593.75=P*1.0625^5

P=267,039.94

thus the value of the principle was $267,037.94