Ron bought goods from shelly katz. On may 8, shelly gave ron a time extension on his bill by accepting a $3000, 8%, 180 day note. On august 16, shelly discounted the note at Roseville bank at 9% what proceeds does shelly rerceive?
Solve this the same way as the other problem I just answered. Compute the present value of the note and discount it 9%
245.45
To calculate the proceeds that Shelly receives from discounting the note at Roseville Bank, we need to follow these steps:
1. Calculate the interest (also known as the discount) on the note.
Interest = Principal * Rate * Time
Interest = $3000 * 8% * (180/360) [Converting 180 days to half a year]
Interest = $120
2. Calculate the discount amount.
Discount Amount = Interest * (Discount Rate + 1)
Discount Amount = $120 * (9% + 1)
Discount Amount = $120 * 1.09
Discount Amount = $130.80
3. Calculate the proceeds received by Shelly.
Proceeds = Principal - Discount Amount
Proceeds = $3000 - $130.80
Proceeds = $2869.20
Therefore, Shelly receives $2869.20 as the proceeds from discounting the note at Roseville Bank.