Question

A 90-day, 12% note for $10,000, dated May 1, is received from a customer on account. Assuming a 360-day year, the maturity value of the note is:

1) 11,200
2) 10,300
3) 9,700
4) 10,000

Answer 1

The maturity value of the note is 2) $10,300.

Step-by-step explanation:

The maturity value of the note can be calculated using the formula:

Maturity Value = Principal + (Principal * Interest Rate * Time)

Given that the principal is $10,000, the interest rate is 12%, and the time is 90 days (or 0.25 years), we can substitute these values into the formula:

Maturity Value = $10,000 + ($10,000 * 0.12 * 0.25) = $10,000 + $300 = $10,300

Therefore, the correct answer is option 2) $10,300.