A 60-day, 6% note for $24,000, dated May 1, is received from a customer on account. The maturity value of the note, assuming a 360- day year, is Oa. $24,000 Ob. $24,240 Oc. $25,440 Od. $240
A 60-day, 6% note for $24,000, dated May 1, is received from a customer on account. The maturity value of the note, assuming a 360- day year, is Oa. $24,000 Ob. $24,240 Oc. $25,440 Od. $240
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![**Problem Statement: Calculating the Maturity Value of a Note**
A 60-day, 6% note for $24,000, dated May 1, is received from a customer on account. The maturity value of the note, assuming a 360-day year, is:
a. $24,000
b. $24,240
c. $25,440
d. $240
**Explanation:**
This problem is designed to test your ability to calculate the maturity value of a note. The steps to solve this are as follows:
1. **Identify the Principal Amount:** This is the face value of the note, which is $24,000.
2. **Determine the Interest Rate:** The note carries an annual interest rate of 6%.
3. **Convert Time Period to Days:** In this case, the note is due in 60 days. The calculation is based on a 360-day year.
4. **Calculate the Interest:**
- Formula: \[ \text{Interest} = \text{Principal} \times \text{Rate} \times \left( \frac{\text{Time}}{360} \right) \]
- Substitute the values: \[ \text{Interest} = 24,000 \times 0.06 \times \left( \frac{60}{360} \right) \]
- Perform the calculation: \[ \text{Interest} = 24,000 \times 0.06 \times 0.1667 \approx 240 \]
5. **Calculate the Maturity Value:**
- Add the interest to the principal: \[ \text{Maturity Value} = \text{Principal} + \text{Interest} \]
- Substitute the values: \[ \text{Maturity Value} = 24,000 + 240 = 24,240 \]
**Conclusion:**
The correct answer is:
b. $24,240](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F02aa96b5-d77a-4e0f-bb5c-38d3ad621419%2F59e740e4-ca6b-4389-a26f-243bce05ae35%2Fr2hsxro_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Problem Statement: Calculating the Maturity Value of a Note**
A 60-day, 6% note for $24,000, dated May 1, is received from a customer on account. The maturity value of the note, assuming a 360-day year, is:
a. $24,000
b. $24,240
c. $25,440
d. $240
**Explanation:**
This problem is designed to test your ability to calculate the maturity value of a note. The steps to solve this are as follows:
1. **Identify the Principal Amount:** This is the face value of the note, which is $24,000.
2. **Determine the Interest Rate:** The note carries an annual interest rate of 6%.
3. **Convert Time Period to Days:** In this case, the note is due in 60 days. The calculation is based on a 360-day year.
4. **Calculate the Interest:**
- Formula: \[ \text{Interest} = \text{Principal} \times \text{Rate} \times \left( \frac{\text{Time}}{360} \right) \]
- Substitute the values: \[ \text{Interest} = 24,000 \times 0.06 \times \left( \frac{60}{360} \right) \]
- Perform the calculation: \[ \text{Interest} = 24,000 \times 0.06 \times 0.1667 \approx 240 \]
5. **Calculate the Maturity Value:**
- Add the interest to the principal: \[ \text{Maturity Value} = \text{Principal} + \text{Interest} \]
- Substitute the values: \[ \text{Maturity Value} = 24,000 + 240 = 24,240 \]
**Conclusion:**
The correct answer is:
b. $24,240
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