| Face Value |
| * Annual Percentage Rate |
| * (Months Outstanding / 12) You could use (Days Outstanding / 360) instead of months |
| Interest Expense (or Revenue) |
| Maturity Value = Principal + Interest |
Q: Why do you divide by 360 and not 365?
A: Often times you'll see 360 in problems because it makes it easier to reason about. It's simply 12 months of 30 days. Some professors are strict about using actual years of 365, but most will use 360 for convenience. It's really up to your professor!