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
To find out the proceeds that Scott receives, we need to calculate the discounted value of the note:
Step 1: Calculate the interest on the note:
Principal amount = $8000
Interest rate = 12%
Time = 90 days
Interest = Principal x Rate x Time
Interest = $8000 x 0.12 x (90 / 360)
Interest = $240
Step 2: Calculate the maturity value of the note:
Principal amount = $8000
Interest = $240
Maturity Value = Principal + Interest
Maturity Value = $8000 + $240
Maturity Value = $8240
Step 3: Calculate the discount on the note:
Maturity Value = $8240
Discount Rate = 10%
Time = 30 days (from June 12 to July 12)
Discount = Maturity Value x Discount Rate x Time
Discount = $8240 x 0.10 x (30 / 360)
Discount = $68.67
Step 4: Calculate the proceeds:
Proceeds = Maturity Value - Discount
Proceeds = $8240 - $68.67
Proceeds = $8171.33
Therefore, Scott receives $8171.33 as the proceeds when he discounts the note at Able Bank.