The maturity value of a $28,000, 6%, 60-day interest-bearing note on August 6 is
Is the interest compounded, and if so, how often?
To calculate the maturity value of an interest-bearing note, we need to consider the principal amount, interest rate, and time period.
In this case, we have:
Principal amount (P) = $28,000
Interest rate (r) = 6% (0.06 as a decimal)
Time period (t) = 60 days
To calculate the maturity value, we use the formula:
Maturity value = P + (P * r * t)
Now, let's calculate the maturity value:
Step 1: Convert the time period from days to years:
t = 60 days ÷ 365 days/year (Approximating the year as 365 days)
Step 2: Calculate the interest:
Interest = P * r * t
Step 3: Calculate the maturity value:
Maturity value = P + Interest
Let's plug in the values and calculate:
Step 1: t = 60 days ÷ 365 days/year (Approximated to 0.1644 years)
Step 2: Interest = $28,000 * 0.06 * 0.1644
Step 3: Maturity value = $28,000 + (Interest from step 2)
Calculating the above values will give you the maturity value of the given interest-bearing note on August 6.
To calculate the maturity value of a note, you will need to consider the principal amount, the interest rate, and the term of the note. In this case, the note is a $28,000, 6%, 60-day interest-bearing note.
Step 1: Calculate the interest on the note:
Interest = Principal * Interest Rate * Time
= $28,000 * 6% * (60/365)
= $280 * (60/365)
= $280 * 0.1644
≈ $46.03
Step 2: Calculate the maturity value:
Maturity Value = Principal + Interest
= $28,000 + $46.03
≈ $28,046.03
Therefore, the maturity value of the note on August 6 is approximately $28,046.03.