First, find the initial proceeds of the simple discount note. Then, find the discount period, the discount, and proceeds after discounting.
-Date Loan Was Made: Jan. 19
Maturity Value: $20,000
Length of Loan: 60 days
Rate: 10%
Date of Discount: Mar. 7
Discount %: 10%
A)Initial Proceeds: $19,666.67;
Discount Period: 13 days;
Discount: $355.56;
Proceeds After Discount: $39,927.78
B)Initial Proceeds: $39,666.67;
Discount Period: 15 days;
Discount: $344.44;
Proceeds After Discount $39,927.78
C)Initial Proceeds: $19,666.67;
Discount Period: 13 days;
Discount: $72.22;
Proceeds After Discount: $19,927.78
D)Initial Proceeds: $59,666.67;
Discount Period: 15 days;
Discount: $411.11;
Proceeds After Discount: $59,927.78

Question

Quizplus · Accepted Answer

The initial proceeds are calculated by subtracting the simple interest (using the rate and length of the loan) from the maturity value. The discount period is the time from the date of discount to the maturity date. The discount is calculated using the discount rate and the maturity value, and the proceeds after discounting are found by subtracting the discount from the initial proceeds.

First, Find the Initial Proceeds of the Simple Discount Note