The face value on a loan is 18,500, the interest is 9.25, and the ...

[james0929]

The face value on a loan is 18,500, the interest is 9.25, and the time is 18 months. The bank discounted the note at 15 three months before the maturity of the loan. What is the bank discount?

Question 2

The face value of a note is 7,500 with an interest rate of 12. The time is based on 90 days in a 360-day year. The note has been discounted at 15 two months before the maturity of the note. How much is the discount and the proceeds?

[Jayson]

Answer to Question 1

790.01;
The interest is I = P  R  T or 2,566.88. The maturity value is 18,500 + 2,566.88 = 21,066.88. The bank discount is B = M  D  T or 790.01.

Answer to Question 2

Discount: 193.13; Proceeds: 7,531.87;
The interest is I = P  R  T or 225. The maturity value is 7,500 + 225 = 7,725. The bank discount is B = M  D  T or 193.13. The proceeds are 7,725 - 193.13 = 7,531.87.