Chapter 10.III, Problem 14RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Using ordinary interest, 360 days, calculate the bank discount, proceeds, and effective rate for the following simple discount notes. Round effective rate to the nearest hundredth of a percent.

Face |
Discount |
Term |
Bank |
Effective |
|||||||

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

14. $95,000 | 9.7 | 45 | __________ | ____________ | _______________ |

To determine

**To calculate:** The amount of bank discount, proceeds value and effective rate of interest 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,

The formula to calculate effective rate of interest is,

**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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