Question

What are the proceeds of a note for $10,500 at a discount rate of 5%, for 30 months?

Answer 1

Given

A note for $10,500 at a discount rate of 5%, for 30 months

find out proceeds of note.

To proof

As given in the question

Principle = $10,500

rate = 5%

Time = 30 months

First convert months into years

1 year = 12 months

$1 month = \frac{1}{12} year$

thus

$Time = \frac{30}{12} year$

                 = 2.5 year

FORMULA

$Simple\ interest = \frac{principle\times rate\times time}{100}$

putting  the above value

we get

$Simple\ interest = \frac{10500\times 5\times 2.5}{100}$

$Simple\ interest = \frac{131250}{100}$

simple interest =$ 1312.5

proceeds of note = $ 1312.5

total value = $10,500 + $ 1312.5

                  = $ 11812.5

Hence proved