When Calculating Interest on a Promissory Note with the Maturity

question 176

Multiple Choice

When calculating interest on a promissory note with the maturity date stated in terms of days the

• A) maker pays more interest if 365 days are used instead of 360.
• B) maker pays the same interest regardless if 365 or 360 days are used.
• C) payee receives more interest if 360 days are used instead of 365.
• D) payee receives less interest if 360 days are used instead of 365.

---

Definitions:

Average Total Cost Curve

A curve that shows the average cost per unit of output at different levels of production; it typically has a U-shape.

Marginal Cost

The climb in cost associated with generating another unit of a product or service.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the quantity of output produced.

Marginal Cost

The cost of producing one additional unit of a product or service, which can change as the level of production varies.