Ray furniture wants to buy a dining room set for $7,000 with a 20% trade discount. Considering a 90-day note dated May 12 with a maturity value of $6,500 at the bank at a discount rate of 13% on June 5. The bank discount if Ray discounts the note is
Well, well, well, it seems Ray furniture is going on a shopping spree! Good for them! Now, let's crunch some numbers and figure out the bank discount if Ray decides to discount the note:
First things first, let's calculate the trade discount on that dining room set. If the original price is $7,000 and there's a 20% trade discount, that's like Ray getting a $1,400 discount. So, the final purchase price would be $7,000 - $1,400 = $5,600.
Now, let's move on to the 90-day note. The maturity value of the note is $6,500, and we need to find the bank discount at a discount rate of 13% over a period from May 12 to June 5.
To calculate the bank discount, we need to determine the discount period. May 12 to June 5 is a total of 24 days (14 days in May + 10 days in June). So, the discount period is 24/360 (360 is a standard for calculating interest on a 360-day year) times the maturity value.
Let's do the math: $6,500 * (24/360) = $433.33
Hence, if Ray decides to discount the note, the bank discount would be approximately $433.33.
Hope that brightened your day a little! If you have any more questions or need further assistance, feel free to ask!
To calculate the bank discount if Ray discounts the note, we need to determine the discount amount and subtract it from the maturity value.
First, let's find the discount amount by using the discount rate provided. The discount rate is 13%, and the maturity value is $6,500.
Discount amount = Discount rate * Maturity value
Discount amount = 0.13 * $6,500
Discount amount = $845
Next, subtract the discount amount from the maturity value to find the bank discount:
Bank discount = Maturity value - Discount amount
Bank discount = $6,500 - $845
Bank discount = $5,655
So, if Ray discounts the note at the bank, the bank discount would be $5,655.
To calculate the bank discount if Ray discounts the note, we need to determine the maturity value, the discount amount, and the bank discount.
1. Maturity Value:
The maturity value is the face value of the note plus the interest. In this case, the face value of the note is $6,500.
2. Discount Amount:
The discount amount is the difference between the maturity value and the discounted price. The discounted price is the face value of the note minus the bank discount.
3. Bank Discount:
Bank discount is the amount deducted from the face value of the note when it is discounted at the bank. It is calculated using the discount rate and the discount period.
Now, let's calculate the bank discount:
Discount Period: The period is from May 12 to June 5, which is 24 days.
Discount Rate: The discount rate is 13%.
1. Maturity Value:
Maturity Value = Face Value + Interest
Maturity Value = $6,500
2. Discount Amount:
Discount Amount = Face Value - Discounted Price
3. Bank Discount:
Bank Discount = (Face Value * Discount Rate * Discount Period) / 360
Let's calculate the bank discount:
Discount Amount = $6,500 - Discounted Price
Discounted Price = Face Value - Bank Discount
Bank Discount = (Face Value * Discount Rate * Discount Period) / 360
Bank Discount = ($6,500 * 0.13 * 24) / 360
Bank Discount = ($2,784) / 360
Bank Discount is approximately $7.73.
Therefore, the bank discount if Ray discounts the note is approximately $7.73.