Chapter 10, Problem 13CR

### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

Chapter
Section

### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# When a note is discounted before maturity, the proceeds are calculated by subtracting the amount of the bank discount from the _____ value of the loan. (10-12)

To determine

To fill: The blank given in the statement “When a note is discounted before maturity, the proceeds are calculated by subtracting the amount of the bank discount from the __________ value of the loan.”

Explanation

When a note is discounted before maturity, the proceeds are calculated by subtracting the amount of the bank discount from the maturity value of the loan.

Consider an example:

Consider that face value is $5,642.31, amount of discount is$73.005

Compute the amount of proceeds:

Substitute $5,642.31 for principal,$73

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