Hafers, an electrical supply co., sold $4200.00 of equipment to Coates Wiring Inc. Coates signed a promissory note 5-12th with 6.00% interest. The due date was Aug. 21st Short of funds Hafers contacted their bank on 7-6th;the bank agreed to take over the note at a 7.20% discount.
The ques. is What procedds did Hafers receive.
To find out the proceeds that Hafers received from the bank after selling the promissory note, we need to calculate the discount and subtract it from the face value of the note.
Step 1: Calculate the discount amount.
Discount = Face Value x Discount Rate
Since the discount rate is 7.20%, we convert it to a decimal by dividing it by 100.
Discount = $4200.00 x (7.20/100)
Discount = $4200.00 x 0.072
Discount = $302.40
Step 2: Calculate the proceeds received by Hafers.
Proceeds = Face Value - Discount
Proceeds = $4200.00 - $302.40
Proceeds = $3897.60
Therefore, Hafers received $3897.60 as proceeds from the bank after selling the promissory note.