Toby signed a simple discount promissory note for $20,000. The discount rate is 8.5%, and the term of the note is 90 days. What are Todd's proceeds on the loan?
A) $19,200
B) $16,000
C) $19,600
D) $19,575

Question

Quizplus · Accepted Answer

The proceeds of a simple discount note are calculated as the face value minus the discount. The discount is calculated as the face value multiplied by the discount rate multiplied by the term of the note. In this case, the proceeds are $20,000 - ($20,000 x 0.085 x 90/360) = $19,575.

Toby Signed a Simple Discount Promissory Note for $20,000