A man makes a simple discount note with a face value of $2,300, a term of 140 days, and a 9% discount rate. Find the discount. (use the banker’s rule.)
To find the discount using the banker's rule, you can use the formula:
Discount = Face Value * Discount Rate * Banker's Time
First, convert the term of 140 days into a fractional form of the year. Since a year consists of 365 days, the banker's time would be:
Banker's Time = Number of days / 365 = 140 / 365
Next, substitute the values into the formula:
Discount = $2,300 * 0.09 * (140 / 365)
Now, you can calculate the discount.
To find the discount using the banker's rule, we will use the formula:
Discount = Face Value * Discount Rate * Time / 360
Given:
Face Value (FV) = $2,300
Discount Rate (DR) = 9%
Time (T) = 140 days
Plug in the values into the formula:
Discount = $2,300 * 0.09 * 140 / 360
Calculating the discount:
Discount = $207
Therefore, the discount on the note is $207.