On May 12, Scott Rinse accepted an$10,000, 12%, 90-day note for a time extension

Question

On May 12, Scott Rinse accepted an$10,000, 12%, 90-day note for a time extension of a bill for goods bought by Ron Prentice. on June 12, Scott discounted the note at Able Bank 11%. (Use Days in a year table)
What proceeds does Scott receive?
Proceeds received $____________ On May 12, Scott Rinse accepted an$10,000, 12%, 90-day note for a time extension of a bill for goods bought by Ron Prentice. on June 12, Scott discounted the note at Able Bank 11%. (Use Days in a year table)
What proceeds does Scott receive?
Proceeds received $____________ (Use Days in a year table)
What proceeds does Scott receive?
Proceeds received $____________

Explanation / Answer

Scott accepted an $10000 12% 90 day note from Ron.
Interest = 10000*12% *90/365 = 295.89
Maturity value of note = $10000 + $295.89 = $10295.89

Now scott discounted the note at Able Bank at 11%, then he will receive the amount after discounting for the balance period. The note discounted after 30 days, so balance period is 60 days.
Bank discount : $10295.89 *11%* 60/365 = $186.17

Now bank subtracts the discount from maturity value and pays balance to Scott:
Amount scott receive = $10295.89 - $186.17 = $10109.72

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.