Question

On november 1, alan company signed a 120-day, 8% note payable, with a face value of $26,100. what is the maturity value (principal plus interest) of the note on march 1? (use 360 days a year.) multiple choice $26,796 $26,564 $26,448 $26,332 $26,100

Answer 1

The maturity value of the note on March 1 is $26,796.

Step-by-step explanation:

To calculate the maturity value of a note payable, we need to calculate the interest accrued over the 120-day period. The formula to calculate the interest is:

Interest = Principal x Rate x Time

In this case, the principal is $26,100, the rate is 8% (or 0.08 as a decimal), and the time is 120 days divided by 360 days (since we are assuming a 360-day year).

So, the interest accrued over the 120-day period is:

Interest = $26,100 x 0.08 x (120/360) = $694

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

Maturity Value = Principal + Interest = $26,100 + $694 = $26,794

Therefore, the correct answer is $26,796.