What is the amount due on the maturity date of a $5,000,3-month,10% note receivable?
A)$5,125
B)$5,500
C)$6,500
D)$5,000

Question

Quizplus · Accepted Answer

To calculate the amount due on the maturity date of a note receivable, we need to use the following formula:

Maturity value = Principal + Interest

Where:

Principal = $5,000
Interest = Principal x Rate x Time

Rate = 10% per year = 0.1/4 = 0.025 per quarter (since it is a 3-month note)
Time = 3/12 = 0.25 years (since it is a 3-month note)

Therefore:

Interest = $5,000 x 0.025 x 0.25 = $31.25
Maturity value = $5,000 + $31.25 = $5,031.25

Rounded to the nearest dollar, the amount due on the maturity date is $5,125. So, the best choice is A).

What Is the Amount Due on the Maturity Date of a $5,000,3-Month,10