Question

A First City Bank accepted a $3,500, 5%, 120-day note dated August 8 from a Capstone Company in settlement of a past bill. On October 11, First City discounted the note at Park Bank at 6%.

a. What is the note’s maturity value? (Use 360 days a year. Do not round intermediate calculations. Round your final answer to the nearest cent.)
b. What is the discount period?
c. What is the bank discount? (Use 360 days a year. Do not round intermediate calculations. Round your final answer to the nearest cent.)
d.
What proceeds does First City receive? (Use 360 days a year. Do not round intermediate calculations. Round your final answer to the nearest cent.)

Answer 1

Notes Maturity Notes
Oct 22 ---> 284 daysAug 8 ---> 220
Grand Total --> 64 days passed

Discount Period
120-64 = 56 days

$3,500 x .05 x 120/360= $58.33$3,500 + $58.33= $3,558.33

Bank Discount
$3,558.33 x .06 x 56/360= $33.21

Proceeds
$3.558.33- $33.21 = $3,525.12