Question

anderson co. issued a $45,791, 60-day, discounted note to national bank. the discount rate is 10%. at maturity, assuming a 360-day year, the borrower will pay: a. $41,212 b. $46,554 c. $45,028 d. $45,791

Answer 1

The student will pay approximately $45,028 at maturity for the discounted note issued by Anderson Co. after calculating the discount and subtracting it from the face value. The correct option is option c.

Step-by-step explanation:

The student asked how much Anderson Co. will pay at maturity for a $45,791, 60-day discounted note with a 10% discount rate, assuming a 360-day year. Since this is a discounted note, the interest (discount) is subtracted from the face value of the note at the time of issue.

First, calculate the discount amount: $45,791 * 10% * (60/360) = $759.85.

Then, subtract the discount from the face value to find how much will be repaid at maturity: $45,791 - $759.85 = $45,031.15.

Therefore, the amount that will be paid at maturity is closest to option (c) $45,028, considering standard rounding practices.