The maturity value of a $40,000, 12%, 3-month note receivable is
A) $41,200.
B) $40,480.
C) $44,800.
D) $40,400.

Question

Quizplus · Accepted Answer

The maturity value of a note receivable is the amount of money that the maker of the note owes to the payee at the maturity date. The maturity value is calculated by adding the principal amount of the note to the interest that has accrued on the note. In this case, the principal amount of the note is $40,000, the interest rate is 12%, and the term of the note is 3 months. The interest that has accrued on the note is $40,000 x 12% x 3/12 = $1,200. Therefore, the maturity value of the note is $40,000 + $1,200 = $41,200.

The Maturity Value of a $40,000, 12%, 3-Month Note Receivable