4.2 Calculate Maturity Value

The maturity value is the total value of a loan or an investment. The total value is the principal plus the interest. Maturity value is the amount that must be repaid when the loan is due, or total amount earned at the end of the investment period.

Formula for calculating maturity value:

4.2 Calculate Maturity Value

Example 7
Find the maturity value of a RM 80,000 loan borrowed for three months at 6%.

Solution:
1. The interest charged.


2. The maturity value of the loan.

4.2 Calculate Maturity Value

Example 8
Asma’ needs to borrow RM 7,200 to upgrade her clinic. She borrows the funds from a finance company for 21 months at an interest rate of 9.25%. Find the interest due on the loan and the maturity value at the end of 21 months.

Solution:
1. The interest due.


2. Maturity value of the loan.

4.2 Calculate Maturity Value

Example 9
RM 10,000 is invested for 4 years 9 months in a bank earning a simple interest rate of 10% per annum. Find the maturity value at the end of the investment period.

*Time is given in terms of years and months, you can just convert it to a mixed fraction.

Solution:

4.2 Calculate Maturity Value

Example 10
What is the maturity value for RM 800 investment made at a bank paying 6% in 2.5 years?

Solution:

4.2 Calculate Maturity Value

Example 11
A grocery store owner requires RM 5,500 to increase the assortment of products in his store. Find the total amount that the store owner needs to pay if he borrowed for 9 months at 8%.

Solution:
1. The interest charged.


2. The maturity value of the loan.


The store owner needs to pay a total of RM 5,830 when the loan is due.