Question

A company receives a 10%, 120-day note for $1,500. The total interest due on the maturity date is

Answer 1

The total interest due on the maturity date for a 120-day note with a 10% annual interest rate and a principal amount of $1,500 is $49.32, calculated using the simple interest formula.

Step-by-step explanation:

To determine the total interest due on the maturity date for a 120-day note issued at a 10% annual interest rate with a principal amount of $1,500, you need to use the simple interest formula:

I = PRT

Where:

I stands for interest

P is the principal amount (the initial amount of money)

R is the annual interest rate (expressed as a decimal)

T is the time the money is invested or borrowed for, in years

First, convert the annual interest rate to a decimal by dividing by 100:

R = 10% / 100 = 0.10

Next, convert the time from days to years (assuming a regular year has 365 days):

T = 120 days / 365 days/year = approximately 0.3288 years

Now, calculate the simple interest:

I = P * R * T

I = $1,500 * 0.10 * 0.3288

I = $49.32

Therefore, the total interest due on the maturity date is $49.32.

Answer 2

Assuming a simple interest model for this information, the interest due at maturity will be:
I=(PRT)/100
where:
P=principle
R=rate
T=time
thus
I=1500×120/364×10/100
I=$49.45
Answer: $49.45