A 120-day simple discount promissory note for $12,000 with a simple discount rate of 9% was signed on July 14. It was discounted on August 30 at 9.5%. Find the proceeds at the time of the sale.
To find the proceeds at the time of the sale, we need to calculate the discount on the promissory note.
First, let's calculate the discount period:
Discount period = Discount Date - Signing Date = August 30 - July 14 = 47 days
Next, let's calculate the discount amount using the simple discount formula:
Discount = Face Value * Discount Rate * Discount Period / 360
Discount = $12,000 * 9.5% * 47 / 360
Discount = $598.67 (rounded to the nearest cent)
Finally, to find the proceeds at the time of the sale, subtract the discount from the face value:
Proceeds = Face Value - Discount
Proceeds = $12,000 - $598.67
Proceeds = $11,401.33
Therefore, the proceeds at the time of the sale is $11,401.33.
To find the proceeds at the time of the sale, we need to calculate the discount and subtract it from the face value of the promissory note.
First, let's calculate the discount amount by using the formula:
Discount = Face Value × Discount Rate × Time
Here,
Face Value = $12,000
Discount Rate = 9.5% (expressed as a decimal, 0.095)
Time = 46 days (from August 30 to July 14)
Discount = $12,000 × 0.095 × (46/365) (converting 46 days to a fraction of a year by dividing it by 365)
Now, let's calculate the proceeds at the time of the sale by subtracting the discount from the face value of the promissory note:
Proceeds = Face Value - Discount
Therefore, you will have:
Proceeds = $12,000 - (Discount calculated above)
To get the actual value of the discount and ultimately the proceeds, let's do the calculations:
Discount = $12,000 × 0.095 × (46/365) = $612.05
Proceeds = $12,000 - $612.05 = $11,387.95
So, the proceeds at the time of the sale would be $11,387.95.