The maturity value of a $20,000, 7%, 75-day interest-bearing note dated September 10, is:
A) $22,912.67
B) $20,291.67
C) $21,029.67
D) $22,219.76
E) None of these

Question

Quizplus · Accepted Answer

The maturity value is calculated using the formula: Principal + (Principal x Rate x Time). Here, the principal is $20,000, the rate is 7% per annum, and the time is 75 days. First, convert the annual rate to a daily rate (7%/365) and multiply by 75 days. The interest is $20,000 x (0.07/365) x 75 = $291.67. Adding this to the principal gives $20,291.67.

The Maturity Value of a $20,000, 7%, 75-Day Interest-Bearing Note