Find the maturity value of the undiscounted promissory note that states that Phillip Esterey borrowed $4,000 for a period of 7 months with ordinary interest at 7%. The date of the note was December 17, 2008. The maturity date was July 17.
P = Po + Po*r*t
P = 4000 + 4000*(0.07/12)*7 = $4163.33
To find the maturity value of the promissory note, we need to calculate the interest accrued over the 7-month period and add it to the principal amount.
First, let's calculate the interest accrued using the formula:
Interest = Principal * Rate * Time
Principal: $4,000
Rate: 7% (0.07 as a decimal)
Time: 7 months
Interest = $4,000 * 0.07 * 7/12
Interest = $163.33 (rounded to the nearest cent)
Next, let's find the maturity value by adding the interest to the principal:
Maturity Value = Principal + Interest
Maturity Value = $4,000 + $163.33
Maturity Value = $4,163.33
Therefore, the maturity value of the promissory note is $4,163.33.
To find the maturity value of the undiscounted promissory note, we need to calculate the interest accrued for the 7-month period.
First, let's calculate the interest for one month:
Interest = Principal * Rate * Time
Principal = $4,000
Rate = 7% (expressed as a decimal, i.e., 0.07)
Time = 1 month
Interest = $4,000 * 0.07 * 1 = $280
Since the note has a 7-month period, we need to multiply the monthly interest by 7 to get the total interest accrued for the duration of the note:
Total Interest = $280 * 7 = $1,960
The maturity value is calculated by adding the total interest to the principal:
Maturity Value = Principal + Total Interest
Maturity Value = $4,000 + $1,960 = $5,960
Therefore, the maturity value of the undiscounted promissory note is $5,960.