Question

Valley Spa purchased $8,200 in plumbing components from Tubman Company and signed a 45-day, 8% promissory note for $8,200. If the note is dishonored, what is the amount due on the note?

a) $8,482
b) $8,920
c) $8,944
d) $8,386

Answer 1

Valley Spa would owe $8,856 if the promissory note is dishonored.

Step-by-step explanation:

In this scenario, Valley Spa purchased plumbing components from Tubman Company and signed a 45-day, 8% promissory note for $8,200. The amount due on the note if it is dishonored can be calculated using the formula:

Amount Due = Principal + (Principal * Interest Rate)

Plugging in the values, Amount Due = $8,200 + ($8,200 * 0.08) = $8,200 + $656 = $8,856.

Therefore, the correct answer is $8,856 (option e).