Canton Graphics issues a $13,000, 7.5%, 2-year note to Bowden Corporation. Interest on the note is _________ and the maturity value is __________.
A) $1,950; $14,950
B) $1,950; $13,000
C) $14,950; $1,950
D) $13,000; $1,950

Question

Quizplus · Accepted Answer

Interest on the note is calculated as Principal amount * Interest rate * Time = $13,000 * 7.5% * 2 = $1,950. The maturity value is the sum of the principal amount and the interest, which is $13,000 + $1,950 = $14,950.

Canton Graphics Issues a $13,000, 7