Question

Valley Designs issued a 90-day, 9% note for $42,000, dated April 22, to Bork Furniture Company on account. Assume 360 days in a year when computing the interest.
1. Determine the due date of the note.
a. July 9
b. July 10
c. July 21
d. July 30

2.. Determine the maturity value of the note.
$______________

Answer 1

Answer:

1. July 21

2. $42,945

Explanation:

April 22 Start leaves 8 days left, and following the months would be like this:

8(April) + 31(May) + 30(June) + 31(July) = 100 days

Now because we only need 90 days in the period, we subtract the last 10 days off of July 31

31(July) - 10 days (July) = July 21

Maturity value = face amount (42,000) + interest (42,000 x 0.09 x 90 / 360)

42,000 + 945 = $42,945