The Maturity Value of a Five-Month Promissory Note Issued May

question 17

Essay

The maturity value of a five-month promissory note issued May 31, 2013, is $2134.00. What is the present value of the note on the date of issue if money is worth 6.3%?

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Definitions:

Value Added

The increase in worth of a product or service as a result of a particular process, often characterized by the difference between the price of the finished product and the cost of the inputs involved in making it.

Raw Materials

Basic materials extracted from natural resources or produced through agriculture, which are used in the production of goods and services.

Injection

Any spending other than by households or any income other than from resource earnings; includes investment, government purchases, exports, and transfer payments.

Circular Flow

An economic model that illustrates the continuous movement of goods, services, and money between producers and consumers in an economy.