The proceeds of a $9,000 8-year promissory note earning 5% compounded semi-annually were $10,474. How many years before maturity date was the note sold if the discounted rate was 7.2% compounded annually.
A) 3.5 years
B) 4.5 years
C) 5.5 years
D) 6.5 years
E) 7.5 years

Question

Quizplus · Accepted Answer

The correct answer is A because the proceeds of the note were $10,474, the discounted rate was 7.2% compounded annually, and the note was sold 3.5 years before maturity.

The Proceeds of a $9,000 8-Year Promissory Note Earning 5