Annamarie Weymeyer held a $3,750, 120-day, non-interest-bearing note dated July
ID: 2777621 • Letter: A
Question
Annamarie Weymeyer held a $3,750, 120-day, non-interest-bearing note dated July 24. On August 16, she took the note to First Bank of the Plains which discounted the note at 10%. Use a 365-day year to find the missing information on the loan. Round your answers to two decimal places, if necessary.
Compute the missing information to discount the following promissory note. Use a 360-day year for all interest and discount calculations.
On September 10, Joe Morrison Financial Services bought a $17,000 promissory note. The note had been written on August 2, was for 105 days, and had an interest rate of 7%. Joe's company discounted the note at 11%. Round dollar amounts to the nearest cent.
Interest Amount: $0 Maturity Value: $ ______ Maturity Date: SelectNov. 19Nov,. 20Nov., 21, or Nov. 22 Days of Discount: _______ days Discount Amount: $ ________ Proceeds: $________Explanation / Answer
(1) Discount the note
Interest = $0
Maturity value = $3,750
Maturity date = 21st Nov (120 days from Jul 24)
Days of discount = 120 days
Discount amount = $3,750 x 10% x (120 / 365) = $123.29
Proceeds = Maturity value - Discount amount
= $(3,750 - 123.29) = $3,626.71
(2) Promissory note
Interest = $17,000 x 7% x (105 / 360) = $347.08
Maturity value = $17,000
Maturity date = 15th Nov (105 days from Aug 02)
Days of discount = (105 - 39*) = 66 days [*Discounted for the period from which Joe was holding the note (From Sept 10)]
Discount amount = $(17,000 + 347.08) x 11% x (66 / 360) = $349.83
Proceeds = Maturity value - Discount amount
= $(17,347.08 - 349.83) = $16.997.25
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