Question

The bank discount of an $18,000 non-interest-bearing, simple discount, 8% 90-day note is

A. $630.
B. $360.
C. $17,640.
D. $18,360.

Answer 1

Use the formula for simple interest.

I = Prt

Substitute the given values for the corresponding variables. Time is the fraction of a year that is considered to have 360 days.

I = $18,000×0.08×(90/360) = $360