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bogdanovich [222]
3 years ago
7

On March 1st, the Picasso Co. issued a 12 month, $120,000 note, to the Bank of Carbondale. The note carries a 10% interest rate

and all payments for principal and interest will be paid at the end of 1 year. What is the maturity value of the note?
Business
1 answer:
alexira [117]3 years ago
6 0

Answer:

The maturity value of the note is <u>$132,000</u>

Explanation:

A Loan note is a promissory note that is signed to make a promise of an amount of Loan taken by someone that to be returned after a specific time with interest value at a defined in the loan note.

The maturity value of the loan note can be calculated as follow

Face value = $120,000

Interest rate = 10%

Time period = 1 years

Use following formula to calculate the maturity value of the loan note.

Maturity value = Face value x  ( 1 + interest rate )^ numbers of years

Placing values in the formula

Maturity value = $120,000 x ( 1 + 10% )^1

Maturity value = $132,000

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