Question

Ron Prentice bought goods from Shelly Katz. On May 10, Shelly gave Ron a time extension on his bill by accepting a $4,600, 6%, 180-day note. On Aug. 15, Shelly discounted the note at Roseville Bank at 7%. (Use Days in a year table.) What proceeds does Shelly Katz receive? (Use 360 days a year. Do not round intermediate calculations. Round your answer to the nearest cent.)

Answer 1

Shelly Katz receives $4,439 as proceeds from the discounted note.

Step-by-step explanation:

First, we need to calculate the discount on the note by using the formula:

Discount = Face Value of Note * Discount Rate * Discount Period.

Discount = $4,600 * 7% * (180/360) = $161

Next, we need to calculate the proceeds that Shelly Katz receives by subtracting the discount from the face value of the note: Proceeds = Face Value of Note - Discount.

Proceeds = $4,600 - $161 = $4,439.

Therefore, Shelly Katz receives $4,439 as proceeds from the discounted note.