A $10,000,7% note is dated May 18 and is due in 90 days.Using a 360-day year,the maturity value would be:
A)$10,000.
B)$10,700.
C)$10,175.
D)$10,525.

Question

Quizplus · Accepted Answer

The formula for calculating the maturity value of a note is: M = P + (P x R x T), where M is the maturity value, P is the principal amount (in this case, $10,000), R is the interest rate (7% or 0.07), and T is the time in years. Since this note has a 90-day term and a 360-day year is being used, T will be 90/360 or 0.25. Plugging in the values: 
M = 10,000 + (10,000 x 0.07 x 0.25)
M = 10,000 + 175
M = $10,175. Therefore, the correct answer is C.

A $10,000,7% Note Is Dated May 18 and Is Due