Question

On April​ 1, 2019, Barnes Services received a​ 9-month note for​ $12,000 at​ 12%. Calculate the amount of interest due at maturity.​ (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

Answer 1

Answer:

$1,043

Explanation:

Assuming a 12% annual rate, we can convert it to a quarterly rate.

The equivalent quarterly rate is 2.9%.

9 months is the sames as 3 quarters, therefore, we can use the following formula to find the full value of the note at maturity:

12,000 = X (1 + 0.029)^3

12,000 = X(0.92)

12,000/0.92 = X

13,043 = X

Therefore, the interest due at maturity is:

13.043 - 12,000 = 1,043