Twin City Freezer accepts a note with face value of $5150 on June 4. The note is for 270 days at 10% interest. The note is discounted on July 23 at 12%. Find the proceeds.
A) $5128.41
B) $5063.48
C) $5196.39
D) $5126.57

Question

Quizplus · Accepted Answer

The correct answer is A.The proceeds of the note can be calculated using the formula:Proceeds = Face value - DiscountThe discount can be calculated using the formula:Discount = Face value * Discount rate * TimeThe time is calculated by dividing the number of days between the date of the note and the date of the discount by 360.In this case, the face value is $5150, the discount rate is 12%, and the time is (July 23 - June 4) / 360 = 0.539.Therefore, the discount is:Discount = $5150 * 0.12 * 0.539 = $330.39The proceeds are:Proceeds = $5150 - $330.39 = $4819.61Therefore, the proceeds are $4819.61.

Twin City Freezer Accepts a Note with Face Value of $5150