Question

Assuming 360 day year,, $54000, 99 day, 8% interest bearing note payable matures, total payment will be

54000

4320

55080

58320

Answer 1

Ans:

Notes payable value = $54,000

Maturity period = 99 days.

Interest on Notes payables = ($54,000*8%)*(90 days/360 days)

Interest on notes payables = $1080

Total payment on maturity = $54,000+$1,080

Total payment on maturity = $55,080.

Hence From the given options 3rd option is correct.

Note: The maturity value of a note payable is the value at the end of the note with interest included. Since the note is 99 days then the interest needs to be calculated by dividing the 99 days by 360 days since the 8% interest is based on an annual rate.

Thank you,