Solve the problem. Round dollar amounts to the nearest cent. Use ordinary interest unless otherwise indicated.
-Bob's BBQ signed a note with a face value of $18,500.00 on September 11. The note is for 90 days and carries an interest rate of 9%. Find the due date and the maturity value of the note.
A)December 10, $18,916.25
B)December 12, $18,500.00
C)December 11, $19,055.00
D)December 11, $20,165.00

Question

Quizplus · Accepted Answer

To find the due date, we add 90 days to September 11: September 11 + 90 days = December 10.

To find the maturity value of the note, we use the simple interest formula:

I = P*r*t

Where:
I = interest
P = principal (face value of the note)
r = interest rate (as a decimal)
t = time (in years)

Since the note is for 90 days, we divide the time by 365 (or use 0.2466 for more accuracy). We have:

I = 18,500 * 0.09 * 0.2466 = $416.25

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

M = P + I = 18,500 + 416.25 = $18,916.25

Therefore, the best choice is A, December 10 and $18,916.25. To find the due date, we need to add 90 days to September 11. 
September 11 + 90 days = December 10

To find the maturity value, we need to use the simple interest formula: 
I = PRT (Interest = Principal x Rate x Time)

I = $18,500.00 x 0.09 x 90/365 (90 days out of a 365-day year) 
I = $425.68

Maturity value = Face value + Interest 
Maturity value = $18,500.00 + $425.68 
Maturity value = $18,916.25

Therefore, the best choice is A (December 10, $18,916.25).

Solve the Problem