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Ron Prentice bought goods from Shelly Katz. On July 13, Shelly gave Ron a time extension...

Ron Prentice bought goods from Shelly Katz. On July 13, Shelly gave Ron a time extension on his bill by accepting a $3,600, 8%, 155-day note. On Oct. 14, Shelly discounted the note at Roseville Bank at 10%.

What proceeds does Shelly Katz receive?

Solutions

Expert Solution

Calculate the discount period

days from July 13 to Oct. 14 is 93days

155 days minus 93 days = 62 days discount period

Calculate the interest using I = PRT

3,600 x .08 x (155/360) = $ 124

Calculate the maturity value

3,600+124 = 3,724 Maturity Value

Calculate the bank discount

3,724 x .10x (62/360)= $64.1355

Calculate the proceeds

3724-64.1355 = $3,659.8645 Proceeds

Shelly katz receives a proceeds of  $3659.8645

jeff jeffy answered 2 years ago
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