Question

On July​ 7, University Bank lent​ $560,000 to Jazz Music Shop on a 60​ day, 7% note. What is the maturity value of the​ note? (Use a​ 360-day year and round answers to the nearest​ dollar.)

Answer 1

Answer: The maturity value of the note is $5,66,533.

We can arrive at the answer with the steps below:

The formula we use to calculate Maturity Value is:

$Maturity Value = Principal * ( 1+ (Rate * Time))$

In this question,

Principal = $560,000

Interest = 7% per year

Time period = 60 days.

Number of days in a year = 360 days (given in the question).

Substituting the value of the time period calculated above in the Maturity Value formula we have:

Maturity Value = $560,000 × (1+(0.07×60/360))

Maturity Value = $560,000 × (1+(0.07×1/6))

Maturity Value = $560,000 × 1.011666667

Maturity Value = $566533.3333