Explanation Given Information: Face value is $ 290 , 000 , the discount rate is 11.9 % , the time period is 110 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 The formula to calculate the effective rate of discount is, Effective interest rate = Interest Purchase Price × Time Calculation: Consider that the face value of the loan is $ 290 , 000 , the discount rate is 11.9 % and the time period is 110 days. Simplify the discount rate as 11.9 % = 11.9 100 = 0.119 Evaluate the time as Time = Number of days of a loan 360 = 110 360 Substitute $ 290 , 000 for face value, 0.119 for the discount rate and 110 360 for a time in the formula Bank Discount = Face value × Discount Rate × Time . Bank Discount = Face value × Discount Rate × Time = 290 , 000 × 0.119 × 110 360 = $ 10 , 544.72 Hence, the amount of discount is $ 10 , 544.72 . Consider that face value is $ 290 , 000 , the amount of discount is $ 10 , 544

Contemporary Mathematics For Business & Consumers, Brief Edition, Loose-leaf Version

8th Edition

ISBN: 9781305867192

Author: Robert Brechner, Geroge Bergeman

Publisher: South-Western College Pub

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Chapter 10, Problem 23AT

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To calculate: The amount of bank discount, proceeds value and effective rate of discount where face value is $290,000, the ordinary discount rate is 11.9%, the time period is 110 days.

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Chapter 10, Problem 22AT

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Contemporary Mathematics For Business & Consumers, Brief Edition, Loose-leaf Version

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 effective rate of discount where face value is $ 290 , 000 , the ordinary discount rate is 11.9 % , the time period is 110 days.

Solution Summary: The author calculates the amount of bank discount, proceeds value, and effective rate of discount. The face value of the loan is 290,000.

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To calculate: The amount of bank discount, proceeds value and effective rate of discount where face value is $290,000, the ordinary discount rate is 11.9%, the time period is 110 days.

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Chapter 10 Solutions