How much is the maturity value if Dorothy borrows from ABC Savings and Loans if she was charged P5,000.00 simple interest at the rate of 5% per year? Assume that Dorothy borrowed the money for 3 years.

Php 33,333.33

Php 30,333.33

Php 38,333.33

Php 35,333.33

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?

---

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.

How much is the maturity value if Dorothy borrows from ABC Savings and Loans if she was charged P5,000.00 simple interest at the rate of 5% per year? Assume that Dorothy borrowed the money for 3 years.

Learn how to calculate the maturity value of a loan with simple interest. This example calculates the total owed when Dorothy borrows at a rate of 5% per year, with a P5,000 simple interest over 3 years, resulting in a maturity value of Php 38,333.33.

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