When a company borrows a discounted note for $30,000,it receives less than $30,000 and must repay $30,000.

Question

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When a company borrows a discounted note, the lender subtracts the interest or discount from the principal amount upfront and only disburses the net amount to the borrower. In this case, if the note is worth $30,000 but is discounted, the borrower may only receive, say, $28,000 upfront, and will have to repay the face or principal amount of $30,000, plus any interest or fees, at maturity.

When a Company Borrows a Discounted Note for $30,000,it Receives