Find the maturity value of the undiscounted promissory note that states that Phillip Esterey borrowed $8,000 for a period of 8 months with ordinary interest at 10%. The date of the note was August 1, 2008. The maturity date was April 1.
V = Vo + Vo*r*t
V = 8000 + 8000*(0.10/360)*240 = $8,533.33
To find the maturity value of the promissory note, we need to calculate the simple interest for the given period and add it to the principal amount.
First, let's calculate the interest:
Interest = Principal * Rate * Time
Where:
Principal = $8,000
Rate = 10% (which can be expressed as 0.10)
Time = 8 months
Interest = $8,000 * 0.10 * 8/12 (since the time is given in months, we divide by 12 to convert it to years)
Simplifying the equation, we have:
Interest = $8,000 * 0.10 * 8/12
= $8,000 * 0.10 * 2/3
= $8,000 * 0.0667
= $533.33
The interest on this promissory note is $533.33
Now, to find the maturity value, we add the interest to the principal:
Maturity Value = Principal + Interest
= $8,000 + $533.33
= $8,533.33
Therefore, the maturity value of the promissory note is $8,533.33.