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Discount Notes

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Ron Prentice bought goods from shelly katz. on may 8, shelly gave ron a time extension on his bill by accepting a 3000.00, 8%, 180-day note. on august 16 shelly discounted the note at roseville bank at 9%. What proceeds does shelly katz receive? We are using 360 for the day

  • Discount Notes - ,

    days from may 8 to august 16 is 100 days
    3,000 x .08 x (180/360) = $ 120
    3,000+120 = 3,120 Maturity Value
    180 days minus 100 days = 80 days discount period
    3,120 x .09 x (80/360)= $62.40
    3120-62.40 = $3,057.60 Proceeds

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