4.7 Define The Basic Terms Used With ...
4.7 Define The Basic Terms Used With Promissory Notes
It is a written promise to pay a certain sum of money on a specific future date by one person or firm to another person or firm. It is a legal document between lender and borrower.
Some promissory notes are non-interest-bearing. The borrower pays back only the amount borrowed at maturity. However, most notes are interest bearing.
4.7 Define The Basic Terms Used With ...
4.7 Define The Basic Terms Used With Promissory Notes
The following is an example of an interest-bearing note:
The above promissory note is called interest bearing promissory note. It is a legal document that promises to pay a certain amount of money at a determined future date.
4.7 Define The Basic Terms Used With ...
4.7 Define The Basic Terms Used With Promissory Notes
Below are the terms of a simple interest promissory note.
| 1. |
Maker |
: Danish Mohamad |
| 2. |
Payer |
: Asma’ Abu Bakar |
| 3. |
Payee |
: Asma’ Abu Bakar |
| 4. |
Face value |
: RM 750.00 |
| 5. |
Term of loan (Length of time until the note is due) |
: 90 days |
| 6. |
Date loan was made |
: October 27, 2005 |
| 7. |
Date loan is due |
: January 25, 2006 |
| 8. |
Maturity value (Principal + interest) |
: RM 772.50 |
4.7 Define The Basic Terms Used With ...
4.7 Define The Basic Terms Used With Promissory Notes
Calculation for interest charged and maturity value of the note are shown below:
