Question

On June 8, Alton Co. issued an $77,774, 12%, 120-day note payable to Seller Co. Assuming a 360-day year for your calculations, what is the maturity value of the note? When required, round your answer to the nearest dollar. Select the correct answer. $87,107 $80,885 $9,333 $77,774

Answer 1

The correct option is $80,885

Step-by-step explanation:

Maturity value is the amount that the issuer of notes payable, Alton Co. would pay to the beneficiary of the notes, Seller Co. after 120days.

Maturity value=face value+(face value*120days/360days*12%)

i.e face value plus 120-day interest

Maturity value=$77,774+($77,774*120/360)*12%

maturity value=$77,774+$3110.96

maturity value=$80,884.96