Provide a paper solution. Sydney limited draws a promissory note with a face value of $50 000 and a maturity of 181days. The note can be discounted for $48 090. What is the annual interest rate earned by theholder of the note (assuming that the holder of the note will keep it till maturity?)A) 4%B) 8%C) 2%D) 6%

Interest rate can be calculated as: = Discount amount / Present value * 365/ Days to maturity * 100

Answered: Sydney limited draws a promissory note…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 20P

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Sydney limited draws a promissory note with a face value of $50 000 and a maturity of 181 days. The note can be discounted for $48 090. What is the annual interest rate earned by the holder of the note (assuming that the holder of the note will keep it till maturity?) A) 4% B) 8% C) 2% D) 6%