   Chapter 10.III, Problem 1RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

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

# Calculate the bank discount and proceeds for the following simple discount notes. Use the ordinary interest method, 360 days, when applicable. Face Value Discount Rate (%) Term Bank Discount Proceeds $4,500 13 6 months$292.50 $4,207.50 To determine To calculate: The amount of bank discount and proceeds by using the ordinary interest methodif required where face value is$4,500, discount rate is 13%, time period is 6 months.

Explanation

Given Information:

Face value is $4,500, discount rate is 13%, time period is 6 months. Formula used: 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 valueDiscount Calculation: Consider thatface value of loan is$4,500, discount rate is 13% and time period is 6 months.

Compute the discount amount,

13%=13100=0.13

Evaluate the time as,

Time=Number of months of a loan12=612

Compute the amount of bank discount by substituting \$4,500 for face value, 0

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