Solve the problem. Round rates to the nearest tenth of a percent, dollar amounts to the nearest cent, and time to the nearest day.
-A $2,000 note is signed, for 210 days, at a discount rate of 11%. Find the proceeds.
A)$1,780.00
B)$1,873.42
C)$2,000.00
D)$1,871.67

Question

Quizplus · Accepted Answer

The formula to find the proceeds of a discounted note is:

Proceeds = Face value - Discount

where

Discount = Face value x Rate x Time

Substituting the given values:

Time = 210 days
Rate = 11% or 0.11 (rounded to the nearest tenth)
Face value = $2,000

Discount = $2,000 x 0.11 x (210/360) = $114.17 (rounded to the nearest cent)

Proceeds = $2,000 - $114.17 = $1,885.83 (rounded to the nearest cent)

Therefore, the best choice is D, which is the closest to $1,885.83.

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