What proceeds would you receive if you borrow $5,000 for 270 days discounted at 12%?
A)$433.84
B)$4,550
C)$4,556.16
D)$5,455

Question

Quizplus · Accepted Answer

The formula to calculate the proceeds (amount received) from a discount loan is:

Proceeds = Principal - (Principal x Rate x Time)

Where:
Principal = $5,000
Rate = 12% or 0.12 (as a decimal)
Time = 270 days / 360 days (since the year is assumed to have 360 days)

Time = 0.75

Putting these values in the formula, we get:

Proceeds = $5,000 - ($5,000 x 0.12 x 0.75)
Proceeds = $5,000 - $450
Proceeds = $4,550

Therefore, the answer is C) $4,556.16 (rounded to the nearest cent).

What Proceeds Would You Receive If You Borrow $5,000 for 270