Question

Kowalski’s Drug Store signed a 15-month simple discount note with a face value of $12,300. Find the proceeds if the discount rate is 12%.
$9,840 $12,115.50 $10,455 $1,845
Find the effective rate of interest (APR) for a loan with a loan amount of $17,300, a time of 180 days, and interest of $1,297.50.
11.5% 20% 3.2% 15%
Discount is the loan amount. True False I need help, its due today. I can't get them wrong and thank you will mark brainliest

Answer 1

A.  Using the Simple Discount Note formula:
     Proceeds = Maturity Value (MV) - Discount; MV = Face Value
     Discount = MdT; M = Maturity; d  = discount; T = Time
                    = $12,300*12%*15/12
     Discount = $1,845
     Proceeds = MV - Discount
                     = $12,300 - $1,845
     Proceeds = $10,455

B. Using the Simple Interest Note formula:
    Effective Rate of Interest = Interest / Proceeds*Time
                                            = $1,297.50 / $17,300*180/360
                                            = .15
    Effective Rate of Interest = .15 or 15%

C. False. Discount is the interest charged to the principal of the loan.