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 calculate the proceeds Scott receives, we need to understand the process of discounting a note.
Step 1: Determine the discount period.
In this case, the discount period is from May 12 to June 12, which is 30 days.
Step 2: Calculate the discount.
The discount is calculated by multiplying the face value of the note by the discount rate and the discount period. To find the discount, use the following formula:
Discount = Face Value * Discount Rate * Discount Period
In this case, the face value of the note is $8000, the discount rate is 10%, and the discount period is 30 days.
Discount = $8000 * 0.10 * 30/360
= $666.67 (rounded to two decimal places)
Step 3: Calculate the proceeds.
The proceeds Scott receives is the face value of the note minus the discount.
Proceeds = Face Value - Discount
Proceeds = $8000 - $666.67
= $7333.33 (rounded to two decimal places)
Therefore, Scott receives proceeds of $7333.33 after discounting the note at Able Bank.