# math

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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

• math -

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.

• math -

8104.96

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