Question

80-day loan with a face value of $18, 500 has a discount rate of 15%. What are the proceeds? Use the banker's method, which uses a 360-day year.

$11,850.25
O $13,222.20
O $16, 115.60
O $17, 112.50

Answer 1

The proceeds value is $17,112.5. Therefore, d. $17,112.5 is the correct option.

The formula for calculating the proceeds of a discounted loan using the banker's method is:

Proceeds = Face Value - Discount

The discount can be calculated using the formula:

Discount = Face Value * Rate * Time

Given:

Face Value = $18,500

Rate = 15% or 0.15

Time = 80 days

First, let's calculate the discount:

Discount = $18,500 * 0.15 * (180 / 360)

Discount = $18,500 * 0.15 * (0.5)

Discount = 1387.5

Now, let's find the proceeds:

Proceeds = Face Value - Discount

Proceeds = $18,500 - 1387.5

Proceeds = $17,112.5

The proceeds value is $17,112.5. Therefore, d. $17,112.5 is the correct option.