Sharma Kennels received a promissory note of $9,500 for 18 months at 12% simple

Question

Sharma Kennels received a promissory note of $9,500 for 18 months at 12% simple interest from one of its customers. After 4 months, the note was discounted at Union Bank at a discount rate of 15%. What are the proceeds Sharma Kennels will receive from the discounted note?

Sharma Kennels received a promissory note of $9,500 for 18 months at 12% simple interest from one of its customers. After 4 months, the note was discounted at Union Bank at a discount rate of 15%. What are the proceeds Sharma Kennels will receive from the discounted note?

Explanation / Answer

Dear Student Thank you for using Chegg !! Given Since Sharma Kennels has already owned this note for 3 months, there is accrued interest of 4 months at 12/12% per month or 4 % which amounts to 9500*4% i.e. 380 $ Total Value of the note is now = 9500 + 380 = 9880 $ The note will continue to accrue 12% interest for 14 more months but the bank demands 15% on 9880 $ So the proceed to Sharma Kennels is 9880$ + 12%of 9500 for 14 months - 15% of 9880 9880 + 1330 - 1482 9728 $ Solution

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