Question

The maturity value of a $409000, 233-day, 11.1% note receivable is (two decimals):

The maturity value of a $409000, 233-day, 11.1% note receivable is (two decimals):

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Answer #1

Interest is annual so first we need to convert it into interest for 233 days.

Annual (Interest rate

11.1%

Effective interest rate for 233 days(11.1/365 x 233)

7.09%

Value of notes receivable at maturity = $ 437,998.10

*((409000)+(409000*7.09%))

Alternate solution assuming number of days in year to be 360

Annual (Interest rate

11.1%

Effective interest rate for 233 days(11.1/360 x 233)

7.18%

Value of notes receivable at maturity = $ 438,366.20

*((409000)+(409000*7.18%))

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