On October 1, Dalton Corp

question 64

Multiple Choice

On October 1, Dalton Corp. borrows $100,000 from National Bank, signing a six-month note payable for that amount, plus interest to be computed at a rate of 9% per annum. Indicate all correct answers.

• A) Dalton's liability at October 1 is only $100,000.
• B) The maturity value of this note is $104,500.
• C) At December 31, Dalton will have a liability for accrued interest payable in the amount of $4,500.
• D) Dalton's total liability for this loan at November 30 is $101,500.

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Definitions:

Maturity Value

The total amount that will be paid to an investor at the maturity date of a financial instrument, including principal and interest.

Bank Discount

The difference between the face value of a banknote or security and its selling price, before it reaches its maturity.

Discount Period

The time frame within which a buyer can pay less than the full amount due by taking advantage of a discount offered by the seller.

Discounted Note

A promissory note that is sold or redeemed for less than its face value before its maturity date.