How to Calculate the Maturity Value of Notes

by C. Taylor ; Updated April 19, 2017

Notes are fixed-term investments, which grow in value due to interest. After a certain period of time, notes "mature," which means they pay the investor the face value plus any accrued interest. Depending on the note, interest may be simple or compounded. Short-term notes, such as 30-day or 90-day notes, typically use simple interest. Multi-year notes typically use compounded interest, which means the accrued interest also grows in value.

Simple Interest

Step 1

Divide the note investment term, in days, by 365 to calculate the fraction of a year. Some companies use 360 days when calculating years, so confirm this figure before performing your calculation. As an example, a 30-day note would be 0.082192 of a year when using 365 days to constitute a full year.

Step 2

Multiply this figure by the annual interest rate, in decimal form. In the example, an 8 percent interest rate would be 0.0065753 for the term.

Step 3

Add 1 to this figure. In the example, you get 1.0065753.

Step 4

Multiply this figure by the note's face value to calculate the maturity value. In the example, a $5,000 note would have a maturity value of $5,032.88.

Compound Interest

Step 1

Add 1 to the interest rate, in decimal format. As an example, an 8-percent interest rate would gives you 1.08.

Step 2

Raise this figure to the power of the number of years on the note. In the example, a 5-year note, compounded annually, is calculated as 1.08 to the power of 5, which gives you 1.46933.

Step 3

Multiply this figure by the note's face value to calculate its maturity value. In the example, this gives you a maturity value of $7,346.64.