{"id":574,"date":"2025-05-08T05:10:45","date_gmt":"2025-05-08T05:10:45","guid":{"rendered":"https:\/\/yaveni.com\/blog\/?p=574"},"modified":"2025-05-08T05:10:46","modified_gmt":"2025-05-08T05:10:46","slug":"a-company-borrowed-10000-by-signing-a-180-day-promissory-note-at-9-2","status":"publish","type":"post","link":"https:\/\/gaviki.com\/blog\/a-company-borrowed-10000-by-signing-a-180-day-promissory-note-at-9-2\/","title":{"rendered":"A company borrowed $10,000 by signing a 180-day promissory note at 9%"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">A company borrowed $10,000 by signing a 180-day promissory note at 9%. The maturity value of the note is:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A. $10,450<br>B. $10,900<br>C. $10,075<br>D. $11,800<br>E. $10,300<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><strong>The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To find the maturity value of a promissory note, we use the formula:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">$$<br>\\text{Maturity Value} = \\text{Principal} + \\text{Interest}<br>$$<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 1: Identify the values given<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Principal (P) = \\$10,000<\/li>\n\n\n\n<li>Time (T) = 180 days<\/li>\n\n\n\n<li>Rate (R) = 9% annual interest<\/li>\n\n\n\n<li>Use a 360-day year (common in financial math)<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Step 2: Calculate the interest<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">We use the simple interest formula:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">$$<br>\\text{Interest} = P \\times R \\times \\frac{T}{360}<br>$$<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Substitute the known values:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">$$<br>\\text{Interest} = 10,000 \\times 0.09 \\times \\frac{180}{360}<br>$$<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">$$<br>\\text{Interest} = 10,000 \\times 0.09 \\times 0.5 = 10,000 \\times 0.045 = 450<br>$$<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 3: Calculate the maturity value<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">$$<br>\\text{Maturity Value} = 10,000 + 450 = \\boxed{10,450}<br>$$<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Final Answer: <strong>A. \\$10,450<\/strong><\/h3>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation (300 words):<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">A promissory note is a financial instrument in which a borrower agrees to repay a specific sum of money at a future date, with interest. In this case, the company borrows \\$10,000 for 180 days at an annual interest rate of 9%. The goal is to determine the total amount the company must repay at the end of the term\u2014known as the <strong>maturity value<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Interest on such short-term notes is typically calculated using the <strong>simple interest formula<\/strong>:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">$$<br>\\text{Interest} = P \\times R \\times \\frac{T}{360}<br>$$<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">where:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>$P$ is the principal (\\$10,000),<\/li>\n\n\n\n<li>$R$ is the annual rate (9% or 0.09),<\/li>\n\n\n\n<li>$T$ is the number of days the loan is outstanding (180),<\/li>\n\n\n\n<li>and 360 is used instead of 365 in banking to simplify calculations.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Plugging in the numbers, the interest earned over 180 days is \\$450. This interest is added to the original principal to find the maturity value\u2014the total amount due when the note reaches the end of its term.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Thus, the maturity value is:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">$$<br>\\$10,000 + \\$450 = \\$10,450<br>$$<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This makes <strong>Option A<\/strong> the correct answer. Understanding how to compute the maturity value is critical for both borrowers and lenders to plan cash flows and assess the cost of borrowing.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A company borrowed $10,000 by signing a 180-day promissory note at 9%. The maturity value of the note is: A. $10,450B. $10,900C. $10,075D. $11,800E. $10,300 The correct answer and explanation is : To find the maturity value of a promissory note, we use the formula: $$\\text{Maturity Value} = \\text{Principal} + \\text{Interest}$$ Step 1: Identify the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-574","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/574","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=574"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/574\/revisions"}],"predecessor-version":[{"id":575,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/574\/revisions\/575"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=574"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=574"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=574"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}