As a result of a loan from National Bank, Miama Company signed a 45-days note for $8,000 that the bank discounted at 8 percent. Assuming a 360-day year, the proceeds received by Miama Company equals _____.
A) $8,000
B) $8,080
C) $7,920
D) $7,360

Question

Quizplus · Accepted Answer

The proceeds received by Miami Company would be the face value of the note minus the discount.

Discount = face value * rate * time
Discount = $8,000 * 0.08 * (45/360)
Discount = $80

Proceeds = face value - discount
Proceeds = $8,000 - $80
Proceeds = $7,920

Therefore, the answer is C) $7,920.

As a Result of a Loan from National Bank, Miama