When a note - other companies generally use a 365-day year...

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When a note's due date is expressed in days, the specified number of days is divided by 360 or 365  in the interest calculation. You may see either of these figures because accountants used a 360-day  year to simplify their calculations before computers and calculators became widely available, and  many textbooks still follow this convention. In current practice, however, financial institutions and 
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Unformatted text preview: other companies generally use a 365-day year to calculate interest. Therefore, you should be prepared to calculate interest either way. The interest on a 90-day, 12%, $10,000 note equals $300 if a 360-day year is used to calculate interest, and the interest equals $295.89 if a 365-day year is used....
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This note was uploaded on 11/14/2011 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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