If the interest on a note is 12.5% and the principal was $100,000, what is the maturity value of the note, if the note is outstanding for 7 months? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

First, calculate the interest using the formula:

Interest = Principal x Rate x Time

where Rate is the interest rate as a decimal (i.e., 0.125) and Time is the time in years (i.e., 7/12 = 0.58 years)

Interest = 100,000 x 0.125 x 0.58 = $7,292.

The maturity value is the sum of the principal and the interest:

Maturity Value = Principal + Interest = 100,000 + 7,292 = $107,292

Therefore, the answer is C.

If the Interest on a Note Is 12