Question

What are the proceeds of a note for $10,500 at a discount rate of 5%, for 30 months?

Answer 1

Given

A note for $10,500 at a discount rate of 5%, for 30 months

find out proceeds of note.

To proof

As given in the question

Principle = $10,500

rate = 5%

Time = 30 months

First convert months into years

1 year = 12 months

`1 month = (1)/(12) year`

thus

`Time = (30)/(12) year`

= 2.5 year

FORMULA

`Simple\ interest = (principle* rate* time)/(100)`

putting the above value

we get

`Simple\ interest = (10500* 5* 2.5)/(100)`

`Simple\ interest = (131250)/(100)`

simple interest =$ 1312.5

proceeds of note = $ 1312.5

total value = $10,500 + $ 1312.5

= $ 11812.5

Hence proved