Amir needs 12000 to get his business started as soon as possible. He decides to take a loan from a bank. If the amount of bank discount is 354.15, find the amount of the loan.
Amir needs 12000 to get his business started as soon as possible. He decides to take a loan from a bank. If the amount of bank discount is 354.15, find the amount of the loan.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Amir needs 12000 to get his business started as soon as possible. He decides to take a loan from a bank. If the amount of bank discount is 354.15, find the amount of the loan.
Transcribed Image Text:365 days – Non leap year
366 days - Leap year
D = Sdt
HOW TO DETERMINE LEAP YEAR?
Where: D- Bank discount
Example:
2016 + 4 = 504 (leap year) – no remainder
2019 + 4 = 504.75 (non-leap year) – with remainder
S- Amount of maturity value
d- Discount rate
t- Term of discount in years
Proceeds = Maturity Value - Bank Discount
Proceeds = S - D
Maturity Value = Face Value + Interest
S = P +1
S = P + Prt
S= P(1 + rt)
Proceeds = S- Sdt
Proceeds = S(1- dt)
Discount Rate Equivalent to
Simple Interest Rate
Simple Interest Rate
Equivalent to Discount Rate
d :
1+ rt
d
r =
1- dt
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