   Chapter 10.III, Problem 5RE ### 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 Rank Discount Proceeds 5. $7.800 130 days ———— ———— To determine To calculate: The amount of bank discount and proceeds by using the ordinary interest method where face value is$7,800, discount rate is 814%, time period is 130 days.

Explanation

Given Information:

Face value is $7,800, discount rate is 814% and time period is 130 days. Formula used: Compute the time using the ordinary interest method, Time=Number of days of a loan360 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 valuebank discount Calculation: Consider that face value of loan is$7,800, discount rate is 814% and time period is 130 days.

Simplify the discount rate as,

814%=334%=8.25%=8.25100=0.0825

Evaluate the time using the ordinary interest method,

Time=Number of days of a loan360=130360

Compute the amount of bank discount by substituting \$7,800 for face value, 0

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