Assuming a 360-day year, proceeds of $48,750 were received from discounting a $50,000, 90-day note at a bank. The discount rate used by the bank in computing the proceeds was
A) 6.25%
B) 10%
C) 10.26%
D) 9.75%

Question

Quizplus · Accepted Answer

The discount amount is $50,000 - $48,750 = $1,250. The discount rate is calculated as ($1,250 / $50,000) * (360 / 90) = 10%.

Assuming a 360-Day Year, Proceeds of $48,750 Were Received from Discounting