Question

On June 1, 2017, a four-month promissory note for $1850 with interest at 5% was issued. Compute the proceeds of the note on August 28, 2017, if money is worth 6.5%. Ignore any grace period. The proceeds are $

Answer 1

The proceeds of the note on August 28, 2017, would be $1869.27.

Step-by-step explanation:

To compute the proceeds of the promissory note, we need to calculate the interest earned for the period between June 1, 2017, and August 28, 2017. The interest earned can be calculated using the formula:

Interest = Principal × Rate × Time

Using the given information, we have:

Principal = $1850, Rate = 5%, Time = 2.5 months

Plugging these values into the formula, we get:

Interest = $1850 × 0.05 × (2.5/12) = $19.27

The proceeds of the note on August 28, 2017, would be the principal amount plus the interest earned, which is:

Proceeds = Principal + Interest = $1850 + $19.27 = $1869.27