Textbook Problem

Part A: Calculate the interest on the following notes:

Part B: Determine the maturity dates on the following notes:

Check Figure

1. Interest, $66.92

To determine

Compute the interest for the given notes.

Explanation of Solution

Interest: The money charged by the lender for using lender’s funds is referred to as interest. So, interest is an expense for the borrower and revenue for the lender. The interest is generally, computed as a percentage of the money borrowed.

Compute the interest for the given notes.

Principal		×	Rate of Interest	×	Time of Note	=	Interest
1.	$14,600	×	5.5%	×	$\text{30 days ÷ 360 days}$	=	$66.92
2.	11,200	×	6.5%	×	$\text{60 days ÷ 360 days}$	=	121.33
3.	6,400	×	5.0%	×	$\text{90 days ÷ 360 days}$	=	80.00
4.	9,500	×	6.0%	×	$\text{120 days ÷ 360 days}$	=	190.00
5.	3,500	×	7.0%	×	$\text{3 months ÷ 12 months}$	=	61.25

Table (1)

To determine

Compute the maturity dates.

Explanation of Solution

Maturity date: The date on which the borrower should pay the principal amount of loan, or bond, is referred to as maturity date.

Compute the maturity date for the note issued on January 18 with the life of note for 90 days.

Description	Count
Number of days left in January (From 18th to 31st)	13 days
Number of days in February	28 days
Number of days in March	31 days
	72 days
Number of days required in April to total 90 days (90 days–72 days)	18 days
Total days of the term	90 days

Table (2)

Hence, the maturity date is 18^th April.

Compute the maturity date for the note issued on February 12 with the life of note for 6 months.

Description	Count
Number of months from February 12 to March 12	1 month
Number of months from March 12 to April 12	1 month
Number of months from April 12 to May 12	1 month
Number of months from May 12 to June 12	1 month
Number of months from June 12 to July 12	1 month
Number of months from July 12 to August 12	1 month
Total months of the term	6 months

Table (3)

Hence, the maturity date is 12^th August.

Compute the maturity date for the note issued on June 21 with the life of note for 60 days.

Description	Count
Number of days left in June (From 21st to 30th)	9 days
Number of days in July	31 days
	40 days
Number of days required in August to total 60 days (60 days–40 days)	20 days
Total days of the term	60 days

Table (4)

Hence, the maturity date is 20^th August.

Compute the maturity date for the note issued on September 10 with the life of note for 4 months.

Description	Count
Number of months from September 10 to October 10	1 month
Number of months from October 10to November 10	1 month
Number of months from November 10 to December 10	1 month
Number of months from December 10 to January 10	1 month
Total months of the term	4 months

Table (5)

Hence, the maturity date is 10^th January.

Compute the maturity date for the note issued on November 17 with the life of note for 30 days.

Description	Count
Number of days left in November (From 17th to 30th)	13 days
Number of days required in December to total 30 days (30 days–13 days)	17 days
Total days of the term	30 days

Table (6)

Hence, the maturity date is 17^th December.