On September 5, Sheffield company discounted at sunshine bank a 9000.00 Maturity value, 120-day note dated June 5, shushines discount rate was 9%. What proceeds did sheffield company receive? Use the 360 days
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Well, to calculate the proceeds Sheffield Company received, we need to subtract the discount amount from the maturity value.
So, let's do some math... or should I say "mathematics under the sun!"
The discount amount can be calculated by multiplying the maturity value by the discount rate and the time period. In this case, it would be:
Discount Amount = Maturity Value * Discount Rate * (Time / 360)
Substituting the given values we have:
Discount Amount = 9000 * 0.09 * (120/360)
Now let's calculate it:
Discount Amount = 9000 * 0.09 * 0.333
Discount Amount = 9000 * 0.03
Discount Amount = 270
Voila! The discount amount is 270.
To find the proceeds, we subtract the discount amount from the maturity value:
Proceeds = Maturity Value - Discount Amount
Proceeds = 9000 - 270
Proceeds = 8730
Sheffield Company received 8730 as their proceeds. Keep on shining bright like a discounted note!
To calculate the proceeds that Sheffield Company received from the discounted note, we need to use the formula:
Proceeds = Maturity Value / (1 + (Discount Rate * Days / 360))
First, we need to calculate the number of days from June 5 to September 5.
June 5 to July 5 = 30 days
July 5 to August 5 = 31 days
August 5 to September 5 = 31 days
Total days = 30 + 31 + 31 = 92 days
Then, we can substitute the values into the formula:
Proceeds = 9000 / (1 + (0.09 * 92 / 360))
Calculating the value inside the parentheses:
0.09 * 92 / 360 = 0.023
Proceeds = 9000 / (1 + 0.023)
Now, let's simplify the equation:
1 + 0.023 = 1.023
Proceeds = 9000 / 1.023
Proceeds ≈ $8,805.79
Therefore, Sheffield Company received approximately $8,805.79 as proceeds from the discounted note.