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10) Find the total amount of money (maturity value) that the borrower will pay back on a loan of $3429 at 14% annual simple interest for 2.8 years.
A) $4725.16
B) $5253.23
C) $4773.17
D) $4136.46
Explanation & Answer
C) $4773.17
Because this is simple interest, the interest is not compounded and the interest per year will stay the same. 14% x 3429 gives $480.06 interest per year; this times 2.8 (the number of years) gives total interest of 1344.17. The interest of 1344.17 plus the principal of 3429 totals 4773.17.
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