Chapter 10.III, Problem 10RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Using ordinary interest, 360 days, calculate the missing information for the following simple discount notes.

Face |
Discount |
Date of |
Term |
Maturity |
Bank |
||||||||

Value |
Rate (%) |
Note |
(days) |
Date |
Discount |
Proceeds |
|||||||

10. $75,000 | 5 | May 7 | 53 | __________ | __________ | __________ |

To determine

**To calculate:** The amount of bank discount, proceeds value and maturity date where face value is

Explanation

**Given Information:**

Face value is

**Formula used:**

The formula to calculate the time for ordinary interest is,

The formula to compute the amount of bank discount is,

The formula to calculate amount of proceeds is,

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 loan.

Step3. Keep on subtracting the days from consequent months until the maturity date corresponds to the difference.

**Calculation:**

Consider the face value of loan is

Compute the discount amount,

Simplify the discount rate as,

Evaluate the time as,

Substitute

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