The cash to be received at maturity on a $10,000, 8%, 90-day note receivable is:

Question

Quizplus · Accepted Answer

The formula for calculating the maturity value of a note receivable is:

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

In this case, the principal is $10,000, the interest rate is 8% (or 0.08 in decimal form), and the time is 90 days (or 0.25 years in decimal form, since 90 days is one quarter of a year).

Using the formula:

Maturity value = $10,000 + ($10,000 x 0.08 x 0.25)
Maturity value = $10,000 + $200
Maturity value = $10,200

Therefore, the cash to be received at maturity on the $10,000, 8%, 90-day note receivable is $10,200. The correct answer is choice D.

The Cash to Be Received at Maturity on a $10,000