Complete the following table for the simple discount notes. Use the ordinary interest method. Note: Round your answers to the nearest cent. Amount due at maturity $ 4,400 Discount rate 6.25% Time 170 days Bank discount Proceeds
Complete the following table for the simple discount notes. Use the ordinary interest method. Note: Round your answers to the nearest cent. Amount due at maturity $ 4,400 Discount rate 6.25% Time 170 days Bank discount Proceeds
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
Related questions
Concept explainers
Question
![## Transcription for Educational Website
### Simple Discount Notes: Calculating Bank Discount and Proceeds
Complete the following table for the simple discount notes. Use the ordinary interest method. **Note: Round your answers to the nearest cent.**
| Amount due at maturity | Discount rate | Time | Bank discount | Proceeds |
|------------------------|---------------|----------|---------------|----------|
| $4,400 | 6.25% | 170 days | | |
### Explanation:
This table provides a framework for calculating the bank discount and proceeds for a note using simple discount methods. The table includes:
- **Amount due at maturity**: The total amount to be paid back at the end of the loan or note period ($4,400 in this case).
- **Discount rate**: The interest rate applied to the note (6.25% here).
- **Time**: The duration for which the discount is calculated, given in days (170 days).
- **Bank discount**: The interest deducted in advance. It needs to be calculated using the given parameters.
- **Proceeds**: The total amount received after the bank discount is applied. This also requires calculation.
### Calculation Required:
To find the bank discount and proceeds:
1. **Bank Discount**:
\[
\text{Bank Discount} = \text{Amount due at maturity} \times \text{Discount rate} \times \frac{\text{Time}}{360}
\]
2. **Proceeds**:
\[
\text{Proceeds} = \text{Amount due at maturity} - \text{Bank Discount}
\]
Complete these calculations with the given data to fill in the table.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa372cc8e-6670-44e7-851f-ddc372b7bba5%2Ffeba043a-124a-485a-8329-197bc0fe5662%2Fpbti9dn_processed.png&w=3840&q=75)
Transcribed Image Text:## Transcription for Educational Website
### Simple Discount Notes: Calculating Bank Discount and Proceeds
Complete the following table for the simple discount notes. Use the ordinary interest method. **Note: Round your answers to the nearest cent.**
| Amount due at maturity | Discount rate | Time | Bank discount | Proceeds |
|------------------------|---------------|----------|---------------|----------|
| $4,400 | 6.25% | 170 days | | |
### Explanation:
This table provides a framework for calculating the bank discount and proceeds for a note using simple discount methods. The table includes:
- **Amount due at maturity**: The total amount to be paid back at the end of the loan or note period ($4,400 in this case).
- **Discount rate**: The interest rate applied to the note (6.25% here).
- **Time**: The duration for which the discount is calculated, given in days (170 days).
- **Bank discount**: The interest deducted in advance. It needs to be calculated using the given parameters.
- **Proceeds**: The total amount received after the bank discount is applied. This also requires calculation.
### Calculation Required:
To find the bank discount and proceeds:
1. **Bank Discount**:
\[
\text{Bank Discount} = \text{Amount due at maturity} \times \text{Discount rate} \times \frac{\text{Time}}{360}
\]
2. **Proceeds**:
\[
\text{Proceeds} = \text{Amount due at maturity} - \text{Bank Discount}
\]
Complete these calculations with the given data to fill in the table.
Expert Solution
Information;
Amount due at maturity = $4,400
Discount rate = 0.0625 or 6.25%
Time = 170 days
Bank discount = ?
Proceeds = ?
In simple interest method we use 360 days in a year.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education