On May 12, Scott Rinse accepted an $15,000, 13%, 90-day note for a time extension of...

On May 12, Scott Rinse accepted an $15,000, 13%, 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 at 12%. (Use Days in a year table.)

What proceeds does Scott receive? (Use 360 days a year. Do not round intermediate calculations. Round your final answer to the nearest cent.)

Expert Solution

Answer:

Calculate the discount period
90-31=59 days discount period
163 June 12
(132) May 12
31 days passed

Calculate the maturity value
15000*13%*90/360 = 487.5 interest + 15000 = $15487.5 MV

Calculate the bank discount
15487.5 * 12%*59/360 = $304.59 bank discount

Calculate proceeds
15487.5-304.59 = $15792.09 proceeds

ekkarill92 answered 2 years ago

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