Question

On August​ 14, Park Avenue Bank lent​ $210,000 to City Coffee Shop on a 75​ day, 4% note. What is the maturity value of the​ note? ​ (Use a 365minusday year. Do not round intermediate​ calculations, and round your final answer to the nearest​ dollar.)

A. $218,400
B. $211,726
C. $211,750
D. $210,000

Answer 1

To calculate the maturity value of the note, we need to find the amount of interest accrued over the 75-day period. The formula for calculating the interest is: Interest = Principal x Rate x Time. Given the values, we can calculate the maturity value of the note to be approximately $211,095.89.

Step-by-step explanation:

To calculate the maturity value of a note, we need to find the amount of interest accrued over the 75-day period. The formula for calculating the interest is:

Interest = Principal x Rate x Time

Given that the principal amount is $210,000, the interest rate is 4%, and the time period is 75 days, we can plug in these values into the formula:

Interest = $210,000 x 0.04 x (75/365)

After evaluating the formula, we find that the accrued interest is approximately $1,095.89.

To find the maturity value, we add the principal amount to the accrued interest:

Maturity Value = Principal + Accrued Interest

Maturity Value = $210,000 + $1,095.89

Therefore, the maturity value of the note is approximately $211,095.89. Rounded to the nearest dollar, the answer is C. $211,000.

Answer 2

B

Step-by-step explanation:

Interest - (principal x time x rate) divided by 100

where time is expressed in days relative to 365 days in a year and rate expressed as percentage. Principal is the sum lent out

Interest = 210,000 x 75 x 4

100 x 365

= $ 1 726

add the interest to the principal to get the maturity value = 1 726 + 210,000= $211,726