Question

Descriptors are provided below for six situations involving notes receivable being discounted at a bank. In each case, the maturity date of the note is December 31, 2018, and the principal and interest are due at maturity. For each, determine the proceeds received from the bank on discounting the note. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)

Note Date of Note Discount Rate 12% Proceeds Received 12% Note Face Value 60,000 60,000 60,000 120,000 120,000 120,000 3/31/2018 3/31/2018 3/31/2018 6/30/2018 Interest Rate 10% 10% 10% 8% 8% 8% Date Discounted 6/30/2018 9/30/2018 9/30/2018 10/31/2018 10/31/2018 11/30/2018 16% 12% 16% 12% 6/30/2018 6/30/2018

Answer 1

		Interest			Discount
Note	Note Face Value	Period (months)	Interest rate	Interest to maturity	Period (months)	Discount rate	Discount	Proceeds received
	(A)	(i)	(ii)	(B) = [(A)*(i)/12*(ii)]	(iii)	(iv)	(C) = [(A)*(iii)/12*(iv)]	(A) + (B) - (C)
1	$                 60,000	9	10%	$                         4,500	6	12%	$                    3,600	$         60,900
2	$                 60,000	9	10%	$                         4,500	3	12%	$                    1,800	$         62,700
3	$                 60,000	9	10%	$                         4,500	3	16%	$                    2,400	$         62,100
4	$             1,20,000	6	8%	$                         4,800	2	12%	$                    2,400	$      1,22,400
5	$             1,20,000	6	8%	$                         4,800	2	16%	$                    3,200	$      1,21,600
6	$             1,20,000	6	8%	$                         4,800	1	12%	$                    1,200	$      1,23,600