Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

10. Time Value of Money

Time Value of Money Equations

Financial Accounting

10. Time Value of Money

Time Value of Money Equations

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

What is the total interest due at maturity on a $1,500, 12\% annual interest rate, 120-day note? (Assume a 360-day year and simple interest.)

$60

$48

$72

$120

Previous problemNext problem

Verified step by step guidance

Step 1: Understand the formula for calculating simple interest, which is: $ I = P \times r \times t $, where $ I $ is the interest, $ P $ is the principal amount, $ r $ is the annual interest rate, and $ t $ is the time period expressed in years.

Step 2: Identify the values given in the problem: $ P = 1500 $, $ r = 12\% $ (or 0.12 as a decimal), and $ t $ is 120 days. Since the problem assumes a 360-day year, convert $ t $ into years by dividing 120 by 360.

Step 3: Substitute the values into the formula: $ I = 1500 \times 0.12 \times \frac{120}{360} $. Perform the division $ \frac{120}{360} $ to determine the time period in years.

Step 4: Multiply the principal $ P $ by the annual interest rate $ r $, and then multiply the result by the time period in years to calculate the total interest due.

Step 5: Compare the calculated interest to the provided answer choices ($60, $48, $72, $120) to determine the correct answer.