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3 years ago

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On January 8, Lowrence Co. issued a $60,000, 120-day discounted note to Raines Bank. The discount rate is 8%. Assuming a 360-day

year, what is the amount of proceeds received?
a. $58,400
b. $55,200
c. $60,000
d. $61,600

2 answers:

Salsk061 [2.6K]3 years ago

6 0

Answer:

a. $58,400

Explanation:

A discounted note, will make the person receive a lesser amount than the amount due at maturity. This way the person who grants the note is receiving interest for borrowing.

<em><u>Calculations</u></em>

principal x discount rate x time = discount

<em><u>Where</u></em> rate and time should be expressed in the same metric IE if the rate is annual express time in portion of years if it is monthly, in months.

60,000 x 0.08 x 120/360 = 1,600

Now, we subtract this amount form the nominal:

nominal - discount = net

60,000 - 1,600 = <u>58,400</u>

Bess [88]3 years ago

5 0

Answer:

On January 8, Lowrence Co. issued a $60,000, 120-day discounted note to Raines Bank. The discount rate is 8%. Assuming a 360-day year, what is the amount of proceeds received?

$55,200

Explanation:

the proceeds received is $55,200 at a discount of 8% of the money issued ($60,000)

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Note: We need to use cm Hg for units coherence

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