The face value of a note is $1,250 with an interest rate of 13%. The time is based on 180 days in a 360-day year. The note has been discounted at 17% two months before the maturity of the note. What are the proceeds?
A) $1,293.53
B) $1,285.42
C) $1,277.08
D) $1,250.00

Question

Quizplus · Accepted Answer

Step 1: Calculate the interest on the face value for 180 days
I = PV × r × t
I = 1,250 × 0.13 × (180/360)
I = $81.25

Step 2: Calculate the discount on the face value for 60 days
D = PV × r × t
D = 1,250 × 0.17 × (60/360)
D = $31.25

Step 3: Calculate the proceeds
Proceeds = Face Value - Discount + Interest
Proceeds = 1,250 - 31.25 + 81.25
Proceeds = $1,300 - 31.25
Proceeds = $1,293.75

Rounding to the nearest cent, the answer is $1,293.53, which is choice A.

The Face Value of a Note Is $1,250 with an Interest