Question

On July 8, Action Co. issued a $70,000, 6%, 120-day note payable to Scanlon Co. Assuming a 360-day year, what information is needed to calculate the maturity value of the note? a.The interest rate (6%) and the term (120 days) are needed to calculate the maturity value of the note. b.The face value of the note ($70,000) is needed to calculate the maturity value of the note. c.The face value ($70,000), interest rate (6%), and term (120 days) are needed to calculate the maturity value of the note. d.None of the information given is needed to calculate the maturity value of the note.

Answer 1

Answer:

c.The face value ($70,000), interest rate (6%), and term (120 days) are needed to calculate the maturity value of the note.

Explanation:

maturity value = face value + interest

interest = face value*interest rate*period

             = $70,000*6%*120/360

             = 1400

face value = 70,000

maturity value = 70,000 + 1400

                        = 71400

Therefore, face value and interest rates needed to calculate the maturity value of the rate.