what is the bank discount and proceeds on 14000.00 amount due at maturity, Discount rate 3.75% and time of 280 days?
To calculate the bank discount and proceeds for a given amount due at maturity, discount rate, and time, you can use the following formulas:
Bank Discount = Amount Due × Discount Rate × Time
Proceeds = Amount Due - Bank Discount
Now let's calculate the bank discount and proceeds for the given details:
Amount Due = $14,000.00
Discount Rate = 3.75% (expressed as a decimal, which is 0.0375)
Time = 280 days
Step 1: Convert the discount rate to a decimal:
Discount Rate = 3.75% = 0.0375
Step 2: Calculate the Bank Discount:
Bank Discount = Amount Due × Discount Rate × Time
Bank Discount = $14,000.00 × 0.0375 × 280
To calculate this, multiply the amount due by the discount rate expressed as a decimal (0.0375), and then multiply the result by the time (280 days).
Step 3: Calculate the Proceeds:
Proceeds = Amount Due - Bank Discount
Proceeds = $14,000 - (Bank Discount calculated in Step 2)
Now let's substitute the values and calculate the bank discount and proceeds:
Bank Discount = $14,000.00 × 0.0375 × 280 = $14,000.00 × 0.0375 × 280 = $1485.00
Proceeds = $14,000 - $1485.00 = $12,515.00
Therefore, the bank discount for an amount due at maturity of $14,000.00 with a discount rate of 3.75% and a time period of 280 days is $1,485.00. The proceeds would amount to $12,515.00.