On september 5, sheffield company discounted at Sunshine bank a 9000.00 (Maturity Value), 120-day note dated June 5, Shunshine's discount rate was 9% What proceeds did sheffield company receive
We'll be happy to check your answer. What do you think the question is?
well i figured it out here but i don't have the same answere as the back of the book
the back of the book came up with 8937.00 and i came up with 8730.03
Your book is right. If you would like me to show you how I found my answer I would gladly to that.
To calculate the proceeds that Sheffield Company received, we need to find the discount amount on the note. Here's how you can do it:
Step 1: Calculate the discount rate per day
To find the discount rate per day, divide the discount rate by the number of days in a year. In this case, the discount rate is 9% and the note has a 120-day term. So, the discount rate per day would be calculated as follows:
Discount Rate per Day = (Discount Rate / 100) / 365
Discount Rate per Day = (9 / 100) / 365
Discount Rate per Day ≈ 0.0000246
Step 2: Calculate the discount amount
To find the discount amount, multiply the discount rate per day by the maturity value of the note and the number of days until maturity. In this case, the maturity value is $9,000.00 and the note has a 120-day term. So, the discount amount would be calculated as follows:
Discount Amount = Discount Rate per Day × Maturity Value × Number of Days
Discount Amount ≈ 0.0000246 × $9,000.00 × 120
Discount Amount ≈ $26.64
Step 3: Calculate the proceeds
To find the proceeds, subtract the discount amount from the maturity value. In this case, the maturity value is $9,000.00 and the discount amount is approximately $26.64. So, the proceeds would be:
Proceeds = Maturity Value - Discount Amount
Proceeds = $9,000.00 - $26.64
Proceeds ≈ $8,973.36
Therefore, Sheffield Company received proceeds of approximately $8,973.36 from Sunshine Bank on the discounted note.