Determine the maturity value of the note one year from now


Suppose the lender does not refer to an annual interest rate and does not refer to the amount you borrow. You sign a legal instrument (probably a promissory note) that calls for the payment of $106,000 at the maturity date of the loan (one year later). The bank puts $100,000 in your checking account today. Is the annual interest rate on this loan still 6 percent?

Suppose your company borrows $500,000 from a bank, and that amount is deposited in your checking account today. The note that you sign calls for a 6.25 percent annual interest rate. Determine the maturity value (the amount you will pay the bank when the note comes due then) of the note one year from now.

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Accounting Basics: Determine the maturity value of the note one year from now
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