On April 12, Dr. Rowan accepted a $10,000, 60-day, 11% note from Bill Moss granting a time extension on a past-due account. Dr. Rowan discounted the note at the bank at 12% on May 13. The bank discount is:
A)$98.44
B)$111.94
C)$94.48
D)$111.49
E)None of these

Question

Quizplus · Accepted Answer

The bank discount is the difference between the face value of the note and the proceeds received from discounting it. The face value of the note is $10,000. The proceeds received from discounting it is $10,000 - $98.44 = $9,901.56. Therefore, the bank discount is $98.44.