what is the bank discount and proceeds on 20000.00 amount due at maturity, Discount rate 6.25% and time of 180 days?
Amount due
at maturity Discount rate Time Bank discount Proceeds
$20,000 180 days $
$
To calculate the bank discount and proceeds on a given amount due at maturity, with a specific discount rate and time, you can follow these steps:
Step 1: Convert the discount rate to a decimal. In this case, 6.25% would be written as 0.0625.
Step 2: Multiply the amount due at maturity by the discount rate and the time in years. In this case, the amount is $20,000, the discount rate is 0.0625, and the time is 180 days.
Discount = Amount x Discount Rate x Time
Discount = $20,000 x 0.0625 x (180/360)
Step 3: Simplify the expression.
Discount = $20,000 x 0.0625 x 0.5
Discount = $625
The bank discount on $20,000 due at maturity, with a discount rate of 6.25% for 180 days, is $625.
Step 4: Calculate the proceeds. The proceeds are the amount due at maturity minus the discount.
Proceeds = Amount - Discount
Proceeds = $20,000 - $625
Proceeds = $19,375
Therefore, the proceeds on $20,000 due at maturity, with a discount rate of 6.25% for 180 days, are $19,375.