Question

On June 8, Williams Company issued an $80,000, 5%, 120-day note payable to Brown Industries. Assuming a 360-day year, what is the maturity value of the note? When required, round your answer to the nearest dollar. $84,000 $82,600 $88,200 $81,333

Answer 1

Answer:

$81,333

Explanation:

Williams company issued an principal of $80,000

The principal was issued at a 5% rate

The time period is 120-day payable to Brown industries.

The first step is to calculate the interest

Interest= principal × rate × time

= $80,000×0.05×(120/360)

= $80,000 × 0.05 × 0.33333

= $1,333.32

Therefore, the maturity value can be calculated as follows

Maturity value= Interest+principal

= 1,333.32+$80,000

= $81,333.2

= $81,333

Hence the maturity value on the note is $81,333