question archive 1) JAB Consulting received a promissory note of $11,500 at 7% simple interest for 15 months from one of its customers
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1) JAB Consulting received a promissory note of $11,500 at 7% simple interest for 15 months from one of its customers. After 6 months, Grove Isle Bank discounted the note at a discount rate of 8% Calculate the proceeds (in $) that JAB Consulting will receive from the discounted note. Round your answer to the nearest cent.
2) Carlos takes out a loan for $10,400, at 8% ordinary interest. If the amount of interest is $249.60, what is the time period (in days) of the loan? Round any fraction to the next higher day.
Answer:
1)Given Principal=$11500
Simple Interest rate=7% for 15 months
Discount Rate =8%
The 1st step is to calculate the maturity value of the original note
Maturity Value =Principal(1+ Rate* Time)
Maturity Value = 11500 {1+0.07*(15/12)} = $12506.25
The discount period is (15-6) = 9 months
Now calculating the amount of bank discount
Bank discount = (Maturity Value*Discount Rate*Time)
= 12506.25*0.08*(9/12) = $750.375
Now Proceeds of the discounted note = (Maturity Value - Bank discount) = 12506.25-750.375
Proceeds = $11755.88
2) Given that principle amount P =10400
Ordinary interest i =8%
If we let the time period to ne n days
Interest is $249.60
Interest =Principal amount *Interest *time period/365
249.60=(104000.08*n)/365
n=(249.60*365)/(10400*0.08)
=109.5
=110 days (Approx.)