A 180-day note for $10,000 at 11.5% interest dated May 20 isdiscounted on August 28...

A 180-day note for $10,000 at 11.5% interest dated May 20 is discounted on August 28 at a bank that charges a discount rate of 9.5%. Find the proceeds.

Solutions

Expert Solution

Face Value of 180-day note = $10,000

No of days after note discounted from issue date = 100 days

No of days for note to maturity = (180 - 100) = 80 days

Calculating the Proceeds of the Note using discount rate of 9.5%:-

Price = Face Value/[1+(Discount rate*No of days/365 days)]

Price = $10,000/[(1+(0.095*80/360)]

Price = $10,000/[(1+0.021111)]

Price = $9793.25

So, the proceed is $9793.25

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

A seven-year, $10,000 promissory note, dated May 1, 2007, with interest at 12% compounded quarterly is...

A seven-year, $10,000 promissory note, dated May 1, 2007, with interest at 12% compounded quarterly is discounted four years after the date of issue at 16% compounded semi-annually. What are the proceeds of the note? Find the nominal annual rate of interest compounded quarterly that is equal to an effective rate of 19.25% $4,000 is due in five years. If money is worth 12% compounded annually, what is the equivalent payment in two years that would settle this debt? A...

A 180 day promissory note dated September 14th, 2010 is made at 5.25% for $1665. What...

A 180 day promissory note dated September 14th, 2010 is made at 5.25% for $1665. What are the proceeds of the note if it is sold on December 9th , 2010 and money is worth 6% simple interest? Use six decimal places for any intermediate calculations and round the final answer to 2 decimal places. (e.g., 0.00)

1. Spring Designs & Decorators issued a 180-day, 4% note for $76,800, dated April 13 to...

1. Spring Designs & Decorators issued a 180-day, 4% note for $76,800, dated April 13 to Jaffe Furniture Company on account. Required: A. Determine the due date of the note. B. Determine the maturity value of the note. Assume a 360-day year when calculating interest. C. Journalize the entries to record the following: (1) receipt of the note by Jaffe Furniture and (2) receipt of payment of the note at maturity. Refer to the Chart of Accounts for exact wording...

Spring Designs Decorators issued a 180-day, 6% note for $76,800, dated April 13 to Jaffe Furniture...

Spring Designs Decorators issued a 180-day, 6% note for $76,800, dated April 13 to Jaffe Furniture Company on account. Required: A. Determine the due date of the note. B. Determine the maturity value of the note. Assume a 360-day year when calculating interest. C. Journalize the entries to record the following: (1) receipt of the note by Jaffe Furniture and (2) receipt of payment of the note at maturity. Refer to the Chart of Accounts for exact wording of account...

Assume the following information 180 day US interest rate = 8% 180 day British interest rate...

Assume the following information 180 day US interest rate = 8% 180 day British interest rate = 9% 180 day forward rate of British pound = 1.50 Spot rate of British pound = 1.48 Assume that Riverside Corp. from the United States will receive 400,000 pounds in 180 days. Would it be better off using forward hedge or a money market hedge? Substantiate your answer with estimated revenue for each type of hedge and show all work.

Determining Maturity Date Find the maturity date of the following: 120-day note dated May 16 90-day...

Determining Maturity Date Find the maturity date of the following: 120-day note dated May 16 90-day note dated November 9 Calculate Maturity Value Find the maturity value of the following: $8,800 6% 9 months $12,000 2% 75 days Journalizing Notes for Buyer and Seller For each of the following transactions for Jackson Co. (the seller), journalize what the entry would be for the buyer (North Co.). Jackson Company uses the periodic method. Accounts Receivable, North Co. 7,800 Sales 7,800 Sold...

On August 1, 2019, ABC Co. borrowed $10,000 on a one-year Note Payable with an interest...

On August 1, 2019, ABC Co. borrowed $10,000 on a one-year Note Payable with an interest rate of 12% per year. a) What is the adjusting journal entry on November 30, 2019 to record the relevant expense for the month of November? Debit Credit Amount b) When the December 31, 2019 adjusting journal entry is made, a balance sheet account is impacted. Select the name of this account. Also, on January 1, 2020, after making the December 31 adjusting...

The $1,500,000 note receivable is dated May 1, 2016, bears interest at 9%, and represents the...

The $1,500,000 note receivable is dated May 1, 2016, bears interest at 9%, and represents the balance of the consideration received from the sale of Braddock’s electronics division to New York Company. Principal payments of $500,000 plus ap- propriate interest are due on May 1, 2017, 2018, and 2019. The first principal and interest payment was made on May 1, 2017. Collection of the note installments is reasonably assured. (a) Prepare the long-term receivables section of Braddock’s balance sheet at...

A business issued a 180-day, 7% note for $58,000 to a creditor on account. Illustrate the...

A business issued a 180-day, 7% note for $58,000 to a creditor on account. Illustrate the effects on the accounts and financial statements of recording (a) the issuance of the note and (b) the payment of the note at maturity, including interest. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. a. Illustrate the effects on the accounts...

2016 Dec. 16 Accepted a $13,400, 60-day, 7% note dated this day in granting Danny Todd...

2016 Dec. 16 Accepted a $13,400, 60-day, 7% note dated this day in granting Danny Todd a time extension on his past-due account receivable. 31 Made an adjusting entry to record the accrued interest on the Todd note. 2017 Feb. 14 Received Todd’s payment of principal and interest on the note dated December 16. Mar. 2 Accepted a(n) $6,700, 7%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co. 17 Accepted...

Subjects