Final answer:
The face value of a 60-day, 6% note for $10,800 dated April 15 remains $10,800. The face value doesn't change; it's the amount on which interest is calculated, not including the interest itself.
Step-by-step explanation:
The question at hand involves calculating the maturity value of a promissory note and understanding simple interest. Starting with a 60-day 6% note for $10,800 dated April 15, we want to determine its face value at maturity.
The direct answer is the face value of the note remains $10,800 because the term 'face value' refers to the original amount of money on which interest is calculated, not the amount including the interest.
To provide an explanation, the interest on the note can be calculated using the simple interest formula: Interest = Principal × Rate × Time. For this note:
- Principal = $10,800
- Rate = 6% per annum or 0.06 (expressed as a decimal)
- Time = 60/365 (since it’s a 60-day note)
Interest = $10,800 × 0.06 × 60/365. This would yield the interest earned on the note, which needs to be added to the principal to get the maturity value, unlike face value which remains constant.