Andrew has a promissory note for $15,000 dated April 6,2010.The note has a legal due date 123 days later,with simple interest at 12%.Andrew sells the note on June 1,2010 to a bank charging a simple interest rate of 15%.What are the proceeds of the sale?
A)$15,202.77
B)$15,188.40
C)$15,184.55
D)$15,170.17

Question

Quizplus · Accepted Answer

First, we need to find the maturity date of the note:

April 6 + 123 days = August 7, 2010

Next, we need to find the interest accrued on the note from April 6 to June 1:

$15,000 x 12% x (56/365) = $281.92

The total amount due on August 7 is:

$15,000 + $281.92 = $15,281.92

To find the proceeds of the sale, we need to calculate how much interest the bank will earn from June 1 to August 7:

$15,281.92 x 15% x (67/365) = $296.52

The bank will deduct this amount from the total due on August 7 to find the proceeds of the sale:

$15,281.92 - $296.52 = $15,188.40

Therefore, the answer is B.

Andrew Has a Promissory Note for $15,000 Dated April 6,2010