American Bank has loaned $12,000 to Shoreline Petroleum Inc. using a 60-day non-interest-bearing note. The bank discounted the note at 12%. The proceeds of the loan will be

Question

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The bank discounted the note at 12%, which means they will deduct 12% of the face value of the note as their fee for loaning the money upfront. The calculation is: $12,000 x 12% = $1,440. Therefore, the proceeds of the loan will be $12,000 - $1,440 = $11,560.

American Bank Has Loaned $12,000 to Shoreline Petroleum Inc