Question

Brief Exercise 8-09 Presented below are data on three promissory notes. Determine the missing amounts. (Round answers for Total Interest to 0 decimal places, e.g. 825. Round annual interest rate to 0 decimal places, e.g. 15%. Use 360 days for calculation.) Date of Note Terms Maturity Date Principal Annual Interest Rate Total Interest (a) April 1 60 days select a maturity date $660,000 14 % $enter total interest in dollars rounded to 0 decimal places (b) July 2 30 days select a maturity date 84,000 enter an annual Interest Rate in percentages rounded to 0 decimal places % $910 (c) March 7 6 months select a maturity date 196,000 15 % $enter total interest in dollars rounded to 0 decimal places

Answer 1

a. Interest Expense = $15,400, Maturity Date = May 31

b. Interest Rate = 13%, Maturity Date = August 1

c. Interest Expense = $14,700, Maturity Date = September 7

Step-by-step explanation:

a. April 1 to 60 days

Maturity Date = May 31

Interest Expense = $660,000 * 14% * 60/360

Interest Expense = $15,400

b. July 2 to 30 days

Maturity Date = August 1

$910 = $84,000 * Interest Rate * 30/360

$910 * 360 = $84,000 * 30 * Interest Rate

327,600 = 2,520,000 * Interest Rate

Interest Rate = 327,600 / 2,520,000

Interest Rate = 0.13

Interest Rate = 13%

c. March 7 to 6 months

Maturity Date = September 7

Interest Expense = $196,000 * 15% * 180/360

Interest Expense = $14,700