Question

Compute the face value of a 90-day promissory note dated October 22, 2018 that has a maturity value of $76,386.99 and an interest rate of 7.5% p.a.

Answer 1

Answer:

The face value would be $75,000

Step-by-step explanation:

Maturity value = $76,386.99

Time = 90 days

Rate of interest = 7.5%

Let face value be 'x'

By using the formula $A=P(1+\frac{RT}{100})$

                      $76,386.99 = $x(1+\frac{7.5\times \frac{90}{365}}{100})$

Time in years = $\frac{90}{365}$

⇒ $76,386.99 = x( 1 + 0.01849315 )

⇒ x = $\frac{76,386.99}{1.01849315}$

x = $75,000

The face value would be $75,000