Respuesta :
The maturity value of a $16,000 non-interest-bearing, simple discount 6%, 60-day note is: $16,000.
The note does not earn interest because it is non-interest bearing. It is only discounted but its value as notes payable will reflect its face value of 16,000. The discount on notes payable will be amortized over its time and closed to interest expense.
The note does not earn interest because it is non-interest bearing. It is only discounted but its value as notes payable will reflect its face value of 16,000. The discount on notes payable will be amortized over its time and closed to interest expense.
The maturity value of the non-interest-bearing is $16,000.
Further Explanation:
Non- interest-bearing note:
Non-interest bearing note or bond is issued by the companies to raise the funds. These bonds do not charge interest. They are issued at the discount rate on their face value. The issue value is lower than the face value of the note.
The discount rate is the difference between the face value and the cash received by the company. These notes payable have a specific maturity date, and the note-holder receives the face value of the note on the maturity date.
Calculate the maturity value:
The maturity value would not change as the interest is not charged on the non-interest bearing note. The maturity value would be $16,000. The maturity value would not be affected by the discount rate. The discount rate is calculated on the face value or purchase value of the note. So, the discount rate would affect the purchase cost of the note. It would not affect the maturity value of the note.
Thus, the maturity value of note after 60 days would be $16,000.
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Answer details:
Grade: Senior School
Subject: Business Studies
Chapter: Debentures and Bond
Keywords: Bond, note, non-interest bearing note, zero-interest bond, maturity value, face value, purchase value, interest, 60-day, maturity date, simple discount, discount value, $16,000, 6%.
