Question

Use the future value formula to compute the maturity value of the following promissory note. Ignore any grace period. A $5601.00 note is issued on October 18,2011 , at 4.7% for 343 days.

Answer 1

To compute the maturity value of a promissory note, use the future value formula. In this case, the maturity value of the note is approximately $5805.75.

Step-by-step explanation:

To compute the maturity value of a promissory note, we can use the future value formula. The formula is: FV = PV × (1 + r)^t, where FV is the future value, PV is the present value, r is the interest rate, and t is the time in years. In this case, the present value is $5601.00, the interest rate is 4.7%, and the time is 343 days.

First, we need to convert the time to years. There are 365 days in a year, so 343 days is approximately 0.939 years. Plugging in these values into the future value formula, we get FV = $5601.00 × (1 + 0.047)^0.939 = $5,805.751.

Therefore, the maturity value of the promissory note is approximately $5805.75.