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Note Payable Interest and Maturity Values: Financial Mastery
Chapter 26, Problem 1(choose chapter or problem)
Calculating Interest and Finding Maturity Values
Using the formula, compute the interest and maturity values for each of the following notes. Record your answers in your working papers. Use the interest table to check your computations.
\(\begin{array}{rrcc}
& \text { Principal } & \text { Interest Rate } & \text { Term } \\
\text { 1. } & \$ 4,000 & 11.50 \% & 60 \text { days } \\
\text { 2. } & 10,000 & 11.75 \% & 90 \text { days } \\
\text { 3. } & 6,500 & 12.75 \% & 60 \text { days } \\
\text { 4. } & 900 & 12.25 \% & 120 \text { days }
\end{array}\)
Questions & Answers
QUESTION:
Calculating Interest and Finding Maturity Values
Using the formula, compute the interest and maturity values for each of the following notes. Record your answers in your working papers. Use the interest table to check your computations.
\(\begin{array}{rrcc}
& \text { Principal } & \text { Interest Rate } & \text { Term } \\
\text { 1. } & \$ 4,000 & 11.50 \% & 60 \text { days } \\
\text { 2. } & 10,000 & 11.75 \% & 90 \text { days } \\
\text { 3. } & 6,500 & 12.75 \% & 60 \text { days } \\
\text { 4. } & 900 & 12.25 \% & 120 \text { days }
\end{array}\)
Step 1 of 4
A note payable is a debt instrument or a promissory note that is used by a business to issue to the creditor or bank to take a loan from them. It specifies the amount to be paid, the date on which is to be paid, and the interest rate on the principal amount.
1. Calculation of interest and maturity value of note 1:
\(\begin{aligned} \text { Interest } & =\text { Principal } \times \text { Rate } \times \text { Time } \\ & =\$ 4,000 \times 11.50 \% \times \frac{60}{365} \\ & =\$ 75.62 \end{aligned}\)
\(\begin{aligned} \text { Maturity value } & =\text { Principal }+ \text { Interest } \\ & =\$ 4,000+\$ 75.62 \\ & =\$ 4,075.62 \end{aligned}\)
The interest is $75.62 and the maturity value is $4,072.65.
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Note Payable Interest and Maturity Values: Financial Mastery
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Learn how to calculate interest and determine maturity values for note payable in this comprehensive financial tutorial. Explore the essential concepts of debt instruments, principal amounts, and interest rates, and gain practical insights into financial calculations.