Explanation Given Information: Face value is $ 5 , 500 , interest rate is 13 1 2 % for 69 days. On 22 July, note was discounted at the rate 13.7 % . The date of the note is 17 June. Formula used: Steps for determining number of days of a loan 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 loan. Step3. Keep on subtracting the days from consequent months until the maturity date corresponds to the difference. The formula to calculate Maturity value is, M V = P ( 1 + R T ) Where, MV is Maturity value, P is Principal Amount, R is the rate of interest, and T is the time duration. Divide T by 360 to convert days into years. Steps for determining number of days of a loan 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. Determine the number of days for next succeeding months. Step3. Calculate the number of days that are left in the last month till the due date. Step4. Add all the days calculated. The formula to compute the amount of bank discount is, Bank Discount = Face value × Discount Rate × Time The formula to calculate amount of proceeds is, Proceeds = Face value − Discount Calculation: Calculate the number of days that are left in the month when the loan was taken by subtracting the loan date from the number of days in the month as: Number of days left = Total days in that month − Loan Date =30 − 17 =13 Subtract the number of days left that were left when the loan was taken from the total duration of the loan as: Number of days left = 69 − 13 = 56 In the month of July, there are 31 days. So, out of 56 days remaining 31 will be utilized by the months of July. Now, the total number of remaining days is 25 . So, Maturity date is August 25 . Consider that principal amount is $ 5 , 500 , rate of interest is 13 1 2 % , time duration is 69 days. Simplify the rate of interest as, 13 1 2 % = 27 2 % = 13.5 % = 13.5 100 = 0.135 Compute the maturity value: Substitute $ 5 , 500 for principal amount, 0.135 for rate of interest, 69 360 for time duration in the formula M V = P ( 1 + R T ) as, M V = P ( 1 + R T ) = $ 5 , 500 ( 1 + 0.135 × 69 360 ) = $ 5 , 500 ( 1 + 0

Contemporary Mathematics for Business & Consumers

8th Edition

ISBN: 9781305886803

Author: Brechner

Publisher: Cengage

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Chapter 10, Problem 25AT

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To calculate: The maturity date, maturity value, discount period and proceeds of the promissory note where face value is $5,500, interest rate is 1312% for 69 days. On 22 July, note was discounted at the rate 13.7%. The date of the note is 17 June.

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Chapter 10, Problem 24AT

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Chapter 10 Solutions

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 maturity date, maturity value, discount period and proceeds of the promissory note where face value is $ 5 , 500 , interest rate is 13 1 2 % for 69 days. On 22 July, note was discounted at the rate 13.7 % . The date of the note is 17 June.

Solution Summary: The author calculates the maturity date, maturity value, discount period, and proceeds of a promissory note.

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To calculate: The maturity date, maturity value, discount period and proceeds of the promissory note where face value is $5,500, interest rate is 1312% for 69 days. On 22 July, note was discounted at the rate 13.7%. The date of the note is 17 June.

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