Respuesta :
Given:
Principal (P) - $1,300
Interest Rate (r) = 5% annual simple interest or 0.05 in decimal form
Time (t) = 8 years
Find: Maturity value at the end of 8 years
Solution:
To determine the maturity value of the bond at the end of "t" years, we can use the formula below:
[tex]M=P(1+rt)[/tex]where M = maturity value, P = principal, r = interest rate, and t = time in years.
Since P, r, and t are already provided in the question, let's plug it into the formula above.
[tex]M=1,300(1+0.05(8))[/tex]Then, solve for M.
a. First, multiply the rate and the time in years.
[tex]0.05\times8=0.4[/tex]b. Add 1 to the result in step a.
[tex]0.4+1=1.4[/tex]c. Multiply the result in step b by the principal value.
[tex]1.4\times1,300=1,820[/tex]Therefore, at the end of 8 years, the value of the bond will be $1,820.
