Question

Brief Exercise 8-08

Compute interest and find the maturity date for the following notes. (Round answers to 0 decimal places, e.g. 825. Use 360 days for calculation.)

		Date of Note		Principal		Interest Rate (%)		Terms
(a)		June 10		$84,000		8%		60 days
(b)		July 14		$52,400		9%		90 days
(c)		April 27		$12,000		10%		75 days

		Interest		Maturity Date
(a)		$enter the amount of interest in dollars rounded to 0 decimal places		select a maturity date June 30July 1July 10July 11July 12July 31August 1August 8August 9August 10September 30October 1October 11October 12October 13
(b)		$enter the amount of interest in dollars rounded to 0 decimal places		select a maturity date June 30July 1July 10July 11July 12July 31August 1August 8August 9August 10September 30October 1October 11October 12October 13
(c)		$enter the amount of interest in dollars rounded to 0 decimal places		select a maturity date June 30July 1July 10July 11July 12July 31August 1August 8August 9August 10September 30October 1October 11October 12October 13

Answer 1

Solution: A
	CALCULATION OF INTEREST EXPENSES AND MATURITY DATA FOR JUNE 10 NOTE
	Par Value of note	$            84,000
	Interet Rate	8%
	Interest Amount for one year =	$              6,720
	Interest for 60 Days = $ 6,720 X 60 / 360 =	$              1,120
	Maturity Date =
	Balance Days in June =	20	Days
	Days in July	31	Days
	Days in August	9	Days
	Answer = Interest = $ 1,120 and date of Maturity = 9th August
Solution: B
	CALCULATION OF INTEREST EXPENSES AND MATURITY DATA FOR JULY 14
	Par Value of note	$            52,400
	Interet Rate	9%
	Interest Amount for one year =	$              4,716
	Interest for 90 Days = $ 4,716 X 90 / 360 =	$              1,179
	Maturity Date =
	Balance Days in July =	17	Days
	Days in August	31	Days
	Days in September	30	Days
	Days in October	12	Days
	Answer = Interest = $ 1,179 and date of Maturity = 12th October
Solution: C
	CALCULATION OF INTEREST EXPENSES AND MATURITY DATA FOR APRIL 27 NOTE
	Par Value of note	$            12,000
	Interet Rate	10%
	Interest Amount for one year =	$              1,200
	Interest for 75 Days = $ 1,200 X 75 / 360 =	$                  250
	Maturity Date =
	Balance Days in April	4	Days
	Days in May	31	Days
	Days in June	30	Days
	Days in July	10	Days
	Answer = Interest = $ 250 and date of Maturity = 10 th of July