Question

JAB Consulting received a promissory note of $13,500 at 7% simple interest for 15 months from one of its customers. After 6 months, Grove Isle Bank discounted the note at a discount rate of 6% Calculate the proceeds (in $) that JAB Consulting will receive from the discounted note. (Round your answer to the nearest cent.)

Answer 1

Answer:

Amount = $14,024 (Approx)

Step-by-step explanation:

Given:

Amount received P = $13,500

Rate r = 7% = 0.07

Time t = 15 month = 15/12 = 1.25 = year

Discount rate = 6% = 0.06

Computation:

Maturity value = P[1+rt]

Maturity value = 13,500[1+(0.07)(1.25)]

Maturity value = $14,685.61

Time = 15 month - 6 month

Time = 9 month = 9/12 = 0.75 year

Amount = MV[1-dt]

Amount = 14,685.61[1-(0.75)(0.06)]

Amount = $14,024 (Approx)