A $12,000,5% note is dated May 18 and is due in 90 days.Using a 360-day year,the maturity value would be:
A)$12,000.
B)$12,050.
C)$12,175.
D)$12,150.

Question

Quizplus · Accepted Answer

The formula to calculate the maturity value of a note is:

Maturity value = Principal + (Principal x Interest rate x Time)

Where time is calculated in terms of years.

In this case, the principal is $12,000, the interest rate is 5%, and the time is 90 days, which is 0.25 years (90/360).

Therefore,

Maturity value = $12,000 + ($12,000 x 0.05 x 0.25) = $12,150

So, the best choice is D.

A $12,000,5% Note Is Dated May 18 and Is Due