To find the maturity value, we need to calculate the total amount Dorothy owes after 3 years, including the simple interest. The formula for calculating the maturity value $A$ is:

$A = P + I$

where:

• $P$ is the principal (initial amount borrowed),
• $I$ is the simple interest.

The formula for simple interest $I$ is:

$I = P \times r \times t$

where:

• $r$ is the annual interest rate,
• $t$ is the time in years.

Given:

• Simple interest $I = 5,000$
• Interest rate $r = 5\% = 0.05$
• Time $t = 3$ years

Rearrange the simple interest formula to solve for $P$:

$P = \frac{I}{r \times t}$

Calculation:

$P = \frac{5,000}{0.05 \times 3} = \frac{5,000}{0.15} = 33,333.33$

Now, to find the maturity value $A$:

$A = P + I = 33,333.33 + 5,000 = 38,333.33$

Answer:

The maturity value is: Php 38,333.33

Would you like further details on any of these steps?

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1. What is the difference between simple and compound interest?
2. How is the principal amount calculated in simple interest problems?
3. Why does simple interest use a linear growth formula?
4. How would the answer change if the interest were compounded?
5. What is the role of the interest rate in determining the maturity value?

Tip: In simple interest, interest grows linearly, making calculations straightforward and predictable compared to compound interest.