The maturity value of a 90-day note for $4,000 that bears interest at 10 percent a year is
A) $4,400.
B) $4,100.
C) $4,000.
D) $3,900. 4,000 x 90/360 x .1 = 100; 4,000 + 100 = $4,100.

Question

Quizplus · Accepted Answer

The maturity value of a 90-day note for $4,000 that bears interest at 10 percent a year is calculated as follows:
Interest = Principal x Rate x Time
Time is 90/360 or 0.25 (since there are 360 days in a year)
Interest = 4,000 x 0.10 x 0.25 = $100
Maturity value = Principal + Interest = $4,000 + $100 = $4,100. Therefore, the best choice is B.

The Maturity Value of a 90-Day Note for $4,000 That