Ask Question
15 November, 12:40

On june 8, williams company issued an $80,000, 5%, 120-day note payable to brown industries. assuming a 360-day year, what is the maturity value of the note?

a. $82,600

b. $84,000

c. $81,333

d. $88,200

+2
Answers (1)
  1. 15 November, 14:52
    0
    To calculate the maturity of this note,

    we use a simple formula first to get the interest which is:

    I = Principal (amount owed) X Interest Rate (%) X Time (length of loan)

    The days is only divided by only 360 days instead of 365 days. This is because commercial loans often use 360-day calendar years instead of 365-day calendar years. But not all banks used this as their calendar year,

    I = Prt

    = ($80000) (0.05) (120/360)

    = ($80000) (0.01666666666)

    I = $ 1,333.33

    To get the maturity value, the formula is: M = Interest + Principal

    M = I + P

    = $1,333.33 + $80,000

    = $81,333.33 or $81,333, letter C
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “On june 8, williams company issued an $80,000, 5%, 120-day note payable to brown industries. assuming a 360-day year, what is the maturity ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers