What are the proceeds of a note for $10,500 at a discount rate of 5%, for 30 months?
A) $7,899.65
B) $11,812.50
C) $9,187.50
D) $8,550.25

Question

Quizplus · Accepted Answer

The proceeds of a note are calculated by subtracting the discount from the face value of the note. The discount is calculated as Discount Rate * Time in Years * Face Value. For a $10,500 note at a 5% discount rate for 30 months (or 2.5 years), the discount is 0.05 * 2.5 * $10,500 = $1,312.50. Therefore, the proceeds are $10,500 - $1,312.50 = $9,187.50.

What Are the Proceeds of a Note for $10,500 at a Discount