Question

Compute the face value of a 90-day promissory note dated October 22, 2018 that has a maturity value of $76,386.99 and an interest rate of 7.5% p.a.

Answer 1

The face value would be $75,000

Explanation:

Maturity value = $76,386.99

Time = 90 days

Rate of interest = 7.5%

Let face value be 'x'

By using the formula
`A=P(1+(RT)/(100))`

$76,386.99 =
`x(1+(7.5* (90)/(365))/(100))`

Time in years =
`(90)/(365)`

⇒ $76,386.99 = x( 1 + 0.01849315 )

⇒ x =
`(76,386.99)/(1.01849315)`

x = $75,000

The face value would be $75,000