Proceeds from Notes Payable On January 26, Nyree Co. borrowed cash from Conrad Bank by issuing a 45-day note with a face amount of $150,000. Assume a 360-day year. Required:

(a) Determine the proceeds of the note, assuming that the note carries an interest rate of 10%.

(b) Determine the proceeds of the note, assuming that the note is discounted at 10%.

Question

Business

Brian Combs

2 February, 16:55

Proceeds from Notes Payable On January 26, Nyree Co. borrowed cash from Conrad Bank by issuing a 45-day note with a face amount of $150,000. Assume a 360-day year. Required:

(a) Determine the proceeds of the note, assuming that the note carries an interest rate of 10%.

(b) Determine the proceeds of the note, assuming that the note is discounted at 10%.

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Answers (1)

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Joel Schaefer · Answer 1

a) $1,875

b) $ 2,083

Explanation:

a) Notes Payable $150,000

Interest Rate (10%) $15,000

Proceeds from Note $1,875 - 15000/8

b) Notes Payable $150,000

Discount Factor (10%) $166,667

Finance Cost $16,667

Proceeds from Note $2,083.33 - 16667/8