Question

On November 1, Alan Company signed a 120-day, 12% note payable, with a face value of $10,800. What is the maturity value of the note on March 1? (Use 360 days a year.)
a) $11,016
b) $10,800
c) $11,088
d) $11,232
e) $10,944

Answer 1

Answer: $11232

Explanation:

The maturity value of the note on March 1 will be calculated as thus:

Face value = $10800

Interest on note = $10800 × 12% × 120/360 = $432

Maturity value will now be:

= Face value + Interest on note

= $10800 + $432

= $11232