Answered: Alana Olsen borrowed $5,000 for 90 days…

Alana Olsen borrowed $5,000 for 90 days from First Bank. The bankdiscounted the note at 7 percent.a. What proceeds did Olsen receive?b. What is the effective rate to the nearest basis point?

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter17: Accounting For Notes And Interest

Section: Chapter Questions

Problem 1CE

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Question

Alana Olsen borrowed $5,000 for 90 days from First Bank. The bank
discounted the note at 7 percent.
a. What proceeds did Olsen receive?
b. What is the effective rate to the nearest basis point?

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