Question

Determine the maturity date and compute interest for each note. (Use 360 days a year. Do not round intermediate calculations.) Note Contract Date Principal Interest Rate Period of Note (Term) 1. March 1 $ 10,000 6 % 60 days 2. May 15 15,000 8 90 days 3. October 20 8,000 4 45 days

Answer 1

Answer:

See explanation below

Explanation:

Required:

Determine the maturity date and compute interest

1) Given:

Contract date : March 1

Interest :$10,000

Rate: 6%

Period of note: 60 days

The maturity date for this will be 2 months(60 days) from March 1. Therefore maturity date is May 2.

Interest will be calculated as:

$10000 * 0.06 * \frac{60}{360} = 100$

Therefore, interest = $100

2) Given:

Contract date : May 15

Interest :$15,000

Rate: 8%

Period of note: 90 days

The maturity date for this will be 3 months(90 days) from May 15. Therefore maturity date is August 13.

Interest will be calculated as:

$15000 * 0.08 * \frac{90}{360} = 300$

Therefore, interest = $300

3) Given:

Contract date : October 20

Interest :$8,000

Rate: 4%

Period of note: 45 days

The maturity date for this will be 45 days from October 20. Therefore maturity date is December 4.

Interest will be calculated as:

$8000 * 0.04 * \frac{45}{360} = 40$

Therefore, interest = $40

Compute the values:

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Contract date: March 1.

Maturity month: May

Maturity date: May 2.

Interest Expenses: $100

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Contract date: May 15.

Maturity month: August

Maturity date: August 13.

Interest Expenses: $300

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Contract date: October 20.

Maturity month: December

Maturity date: December 4.

Interest Expenses: $40

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