a man holds a note of $6,000 that has an interest rate of 13% annually the note was made on march 17 and is due november 11 he sells the note to a bank on june 14 at a discount rate of 12% annually find the proceeds on the third-party discount rate.
Ok now I m a little confused
To find the proceeds on the third-party discount rate, we need to calculate the discount on the note based on the 12% discount rate, and then subtract that discount from the face value of the note.
First, we need to calculate the number of days between the date the note was made (March 17) and the date it was sold to the bank (June 14). March has 31 days, April has 30, May has 31, and June has 14 days. So, the total number of days is 31 + 30 + 31 + 14 = 106 days.
Next, we need to calculate the maturity period of the note. The note was made on March 17 and is due on November 11. March has 31 days, April has 30, May has 31, June has 30, July has 31, August has 31, September has 30, October has 31, and November has 11 days. So, the total number of days in the maturity period is 31 + 30 + 31 + 30 + 31 + 31 + 30 + 31 + 11 = 236 days.
Now, we can calculate the discount on the note using the formula: Discount = Face Value * Discount Rate * Time / 365.
The face value of the note is $6,000, the discount rate is 12%, the time is 106 days, and the total days in the maturity period is 236 days.
Discount = 6000 * 0.12 * 106 / 236 = $318.64.
Finally, we can calculate the proceeds by subtracting the discount from the face value of the note:
Proceeds = Face Value - Discount = $6,000 - $318.64 = $5,681.36.
Therefore, the proceeds on the third-party discount rate is $5,681.36.