To take advantage of a bicycle manufacturer's closeout special on bikes, wheels inc. borrowed $50,000 from union trust bank. union trust bank charged 3.21% ordinary interest over prime on the loan. the term of the loan was 175 days and the prime rate was 7.35%. what was the maturity value of the loan?

In cases of variable interest rates, such as those used on certain credit cards, the card’s interest rate may be expressed as the prime rate plus a set percentage. This means the rate rises and falls with the prime rate but always remains a fixed percentage above the prime rate at all times.

So to find the maturity value The formula is
Mv=p (1+r×t)
Mv maturity value?
P amount borrowed 50000
R interest rate 10.56% (7.35%+3.21%)
T since the interest is ordinary we divide the number of days by 360
175/360

Mv=50,000×(1+0.1056×(175÷360))
Mv=52,566.67

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