Question

Solve for maturity value, discount period, bank discount, and proceeds. Assume a bank discount rate of 9%. Use the ordinary interest method. (Use Days in a year table.) (Do not round intermediate calculations. Round your final answers to the nearest cent.)

	Face value (principal) Rate of interest Length of note Maturity value Date of note Date note discounted Discount period Bank discount Proceeds $29,600 9% 65 days September 18 October 20

Answer 1

Maturity Value = 29600 + 29600*9%*65/365 = $ 30,074.41

Date of Note = September 18

Date of Maturity = September 18 + 65 days = November 22

Date of Discount = October 20

Discount Period = No. of days between October 20 and November 22 = 33 days

Bank Discount = 30074.41 * 9% * 33/365 = $ 244.72

Proceeds = $ 30,074.41 - $ 244.72 = $ 29,829.69