Question

On July 8, Action Co. issued a $70,000, 6%, 120-day note payable to Scanlon Co. Assuming a 360-day year, what information is needed to calculate the maturity value of the note?

Answer 1

Answer: c. The face value ($70,000), interest rate (6%), and term (120 days) are needed to calculate the maturity value of the note.

Step-by-step explanation:

The Maturity Value of the note payable will be the Total Amount at the end of 120 days. This amount would be the face value of the Note plus the interest that would have accrued over these 120 days.

Maturity Value = Face Value + ( Face Value * interest rate * term)

= 70,000 + ( 70,000 * 0.06 * 120/360)

= 70,000 + 1,400

= $71,400

Option C is correct.