The maturity value of a 90-day note for $8,000 that bears interest at 10 percent a year is
A) $7,800.
B) $8,000.
C) $8,200.
D) $8,800.

Question

Quizplus · Accepted Answer

First, we need to find out the amount of interest that will be charged on the note.

10% annual interest means that the monthly interest rate is 10%/12 = 0.8333%.

For a 90-day note, there are 3 months, so the total interest charged will be:

$8,000 x 0.8333% x 3 = $200

The maturity value of the note is the sum of the principal and the interest:

$8,000 + $200 = $8,200

Therefore, the correct answer is (C) $8,200.

The Maturity Value of a 90-Day Note for $8,000 That