Explanation Given Information: Face value is $ 8 , 75 , 000 , the discount rate is 9 1 2 % , date of note is 25 October and the time period is 87 days. Formula used: The formula to compute the amount of bank discount is, Bank Discount = Face value × Discount Rate × Time The formula to calculate the amount of proceeds is, Proceeds = Face value − Discount Steps for determining maturity date are: Step1. Calculate the number of days that are left in the month loan is taken by subtracting the loan date from the number of days in the month. Step2. Subtract the number of days remaining in the first month from the total duration of the loan. Step3. Keep on subtracting the days from consequent months until the maturity date corresponds to the difference. Calculation: Consider that the face value of the loan is $ 875 , 000 , the discount rate is 9 1 2 % and the time period is 87 days. Simplify the discount rate as 9 1 2 % = 19 2 % = 9.5 % = 9.5 100 = 0.095 Evaluate the time as, Time = Number of days of a loan 360 = 87 360 Substitute $ 875 , 000 for face value, 0.095 for the discount rate and 87 360 for time in the formula Bank Discount = Face value × Discount Rate × Time . Bank Discount = Face value × Discount Rate × Time = 8 , 75 , 000 × 0

Contemporary Mathematics for Business & Consumers

8th Edition

ISBN: 9781305585447

Author: Robert Brechner, Geroge Bergeman

Publisher: Cengage Learning

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Chapter 10, Problem 21AT

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To calculate: The amount of bank discount, proceeds value and maturity date where face value is $8,75,000, the ordinary discount rate is 912%, date of note is 25 October and time period is 87 days.

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Chapter 10, Problem 20AT

Chapter 10, Problem 22AT

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Contemporary Mathematics for Business & Consumers

Ch. 10.I - Find the amount of interest on each of the...Ch. 10.I - Joe Hale goes to a credit union and borrows...Ch. 10.I - Prob. 3TIE Ch. 10.I - Prob. 4TIE Ch. 10.I - a. A loan was made on April 4 and had a due date...Ch. 10.I - a. What is the maturity date of a loan taken out...Ch. 10.I - Prob. 1RE Ch. 10.I - Prob. 2RE Ch. 10.I - Prob. 3RE Ch. 10.I - Prob. 4RE

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The amount of bank discount, proceeds value and maturity date where face value is $ 8 , 75 , 000 , the ordinary discount rate is 9 1 2 % , date of note is 25 October and time period is 87 days.

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To calculate: The amount of bank discount, proceeds value and maturity date where face value is $8,75,000, the ordinary discount rate is 912%, date of note is 25 October and time period is 87 days.

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Chapter 10 Solutions