Question

1) Data for a notes receivable made on May 15th is as follows: Notes Receivables $30,000 Number of days for the note 120 Interest rate 4% Required: (1) Find the maturity date (2) Find the maturity value of the note.

Answer 1

1.

The maturity date is the date at which the note receivable is matured i.e the amount is receivable along with the interest,

In case of specific days after the issue is given while calculating the maturity date, the date of note receivable entered is ignored but the date of maturity is taken, here for 9+0 days from 15th may the maturity date will be calculated as follows:

Date of Note receivable made : 15th May , now, for may 16 days will be counted ( 31 -15) , for june 30 days , and for july 31 days will be there,

so as on july,31st : 16 + 30 + 31 = 77 days have passed, and the maturity date will be in august 13th i.e ( 90 days - 77 days).0

Thus the maturity date for note receivable = August 13th .

2.

Maturity value of the note is the notes principal amount + Interest accrued for the days of receivable.

Here, 365 days of an year is assumed for calculation of interest : Interest = Principal * Rate * Days /365

Maturity value = Note receivable principal value + Note receivable interest

Maturity value = $ 30,000 + ($ 30000 * 4% * 90/365).

Maturity value = $ 30,000 + 295.89

Maturity value of the note = $ 30295.89 i.e $ 30,296 ( Rounded off).

NOTE: Here if 360 days of year is assumed for calculation puropse, then the maturity value would have been changed i.e { $ 30,000 + ($ 30,000 * 4% * 90/360) } = { 30,000 + 300 ) i.e = $ 30,300.