Question

Anderson Co. issued a $43,258, 60-day, discounted note to National Bank. The discount rate is 6%. At maturity, assuming a 360-day year, the borrower will pay:

Answer 1

Answer:

The answer is $43,258.

Explanation: Here the borrower will have to pay the par value at maturity which is $43,258 in this case. The investor, at the time of buying the discounted note will pay an amount equal to Par value - discount.

The borrower will receive an amount less than $43,258 on issue of discounted note but will have to pay the full amount on maturity.