on may 12, Scott accepted an $8000, 12%, 90 day note for a time extension of a bill for goods bought by ron. On june 12, scott discounted the note at able bank at 10% What proceeds does scott receive

8104.96

To find the proceeds Scott receives when he discounts the note, we need to calculate the discount and subtract it from the face value of the note.

1. Calculate the discount amount:
Discount = Face Value of the Note × Discount Rate × Time
Discount = $8000 × 12% × (30/360) (90 days can be converted to 30 days as per common banking practice)
Discount = $320

2. Calculate the proceeds:
Proceeds = Face Value of the Note − Discount
Proceeds = $8000 − $320
Proceeds = $7680

Therefore, Scott receives $7680 as the proceeds when he discounts the note at Able Bank at a 10% rate.

To calculate the proceeds Scott received when he discounted the note at Able Bank, we need to consider the formula for determining the proceeds of a discounted note:

Proceeds = Face value - Discount

1. First, let's calculate the discount.
Discount = Face value × Interest rate × Time
Since the interest rate is 10% and the time is 30 days (from May 12 to June 12), we need to convert the time to a fraction of a year.
Time = 30 days ÷ 360 days (assuming a 360-day year)
Time = 1/12

Discount = $8000 × 0.10 × 1/12
= $8000 × 0.00833333
≈ $66.67

2. Now, we can calculate the proceeds.
Proceeds = Face value - Discount
= $8000 - $66.67
≈ $7933.33

Therefore, Scott receives approximately $7933.33 as proceeds when he discounts the note at Able Bank.

The present value P of the note, assuming it is risk free, two months before it is due, is given by

8000 = P (1 + 0.12/6) = 1.02 P
Therefore P = $7843.

I assumed simple interest without compouhding, to keep it simple.

Discounting the note 10% (presumably to account for risk and inconvenience) makes it worth 90% of that, or $7059.