The face value of a note is $7,500 with an interest rate of 12%. The time is based on 90 days in a 360-day year. The note has been discounted at 15% two months before the maturity of the note. How much is the discount and the proceeds?
Discount: $193.13; Proceeds: $7,531.87;
The interest is I = P × R × T or $225. The maturity value is $7,500 + $225 = $7,725. The bank discount is B = M × D × T or $193.13. The proceeds are $7,725 - $193.13 = $7,531.87.
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