What is the maturity value of a 120-day, 4 % note for $ 18,000
To find the maturity value of a note, you need to calculate the interest earned over the maturity period and add it to the principal amount.
First, we need to calculate the interest earned. The formula to calculate simple interest is:
Interest = Principal x Rate x Time
Where:
Principal = $18,000
Rate = 4% (convert to decimal form by dividing by 100, so 4/100 = 0.04)
Time = 120 days
Plugging in the values:
Interest = $18,000 x 0.04 x (120/365)
To calculate the number of days for the time, we use 365 as the reference since it is the total number of days in a year.
Now, let's calculate the interest:
Interest = $18,000 x 0.04 x (120/365)
= $18,000 x 0.04 x 0.32876712329 (approximated)
≈ $238.36
Next, we add the interest earned to the principal amount to find the maturity value:
Maturity Value = Principal + Interest
= $18,000 + $238.36
≈ $18,238.36
Therefore, the maturity value of a 120-day, 4% note for $18,000 is approximately $18,238.36.