The maturity value of a $20,000, 7%, 75-day interest-bearing note 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 of an interest-bearing note is calculated using the formula: Principal + (Principal * Rate * 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 by dividing by 365, then multiply by 75 days. The interest is $20,000 * (0.07/365) * 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