Question

The maturity value of a seven month promissory note issued

july31,2017 is $3275. what is the present value of the note of the
date of issue if interest is 7.75%?

Answer 1

The present value of the note is $3061.57.

Step-by-step explanation:

The present value of a note can be calculated using the formula:

Present Value = Maturity Value / (1 + interest rate/number of periods)^number of periods

In this case, the maturity value of the note is $3275 and the interest rate is 7.75%.

Since the note is for seven months, the number of periods would be 7/12.

Substituting the values into the formula:

Present Value = 3275 / (1 + 0.0775/12)^(7/12)

Simplifying the expression:

Present Value = $3061.57S