Marble Company discounts a customer's 12%,$5,000,60-day note dated August 1,on August 16.The discount period is 45 days,and the bank discount rate is 15%.The maturity value of the note is $5,100.The bank discount is:
A)$95.62.
B)$31.88.
C)$769.78.
D)$43.25.

Question

Quizplus · Accepted Answer

First, let's find the bank discount:
$5,000 x 15% x (45/360) = $37.50

Then, let's subtract the bank discount from the maturity value to find the amount paid to the customer:
$5,100 - $37.50 = $5,062.50

Finally, let's subtract the amount paid to the customer from the face value of the note to find the discount:
$5,000 - $5,062.50 = -$62.50

Since the discount is negative, it means the customer received more than the face value of the note. Therefore, the correct answer is A) $95.62, which is equal to the amount the customer received more than the face value (12% of $5,000).

Marble Company Discounts a Customer's 12%,$5,000,60-Day Note Dated August 1,on