+598 A promissory note for $600 dated May 15, 2016, requires an interest payment of $150 at maturity. If interest is at 9% compounded monthly, determine the due date of the note.
Any help would be appreciated.
A promissory note for $600 dated May 15, 2016, requires an interest payment of $150 at maturity. If interest is at 9% compounded monthly, determine the due date of the note.
You basically have a promissory note with a PV of $600 and a FV of $750. The question is how long would it take it to grow from $600 to $750, by using the common formula: FV=PV(1+r)^n. The task is to find n.
First, you have to convert the interest rate from monthly compound to DAILY compound, which comes to:8.9675%. By doing that, you will get exact number of days from May 15, 2016 to maturity. And if you did that right, you will see that it will take 909 days to maturity. If you added 909 day to May 15, 2016, you will get
Nov. 10, 2018, which should be the due date of the promissory note.
A promissory note for $600 dated May 15, 2016, requires an interest payment of $150 at maturity. If interest is at 9% compounded monthly, determine the due date of the note.
You basically have a promissory note with a PV of $600 and a FV of $750. The question is how long would it take it to grow from $600 to $750, by using the common formula: FV=PV(1+r)^n. The task is to find n.
First, you have to convert the interest rate from monthly compound to DAILY compound, which comes to:8.9675%. By doing that, you will get exact number of days from May 15, 2016 to maturity. And if you did that right, you will see that it will take 909 days to maturity. If you added 909 day to May 15, 2016, you will get
Nov. 10, 2018, which should be the due date of the promissory note.
