A $95 600.00, non-interest-bearing note due August 1, 2017, discounted on March 1, 2015, at 1.49% compounded monthly. Find the proceeds.

Question

Quizplus · Accepted Answer

The correct answer is A because the proceeds of the discounted note can be calculated using the formula:Proceeds = Face value / (1 + (discount rate / compounding frequency))^(number of compounding periods * time in years)In this case, the face value is $95,600.00, the discount rate is 1.49%, the compounding frequency is monthly, the number of compounding periods is 27 (from March 1, 2015, to August 1, 2017), and the time in years is 2.5. Plugging these values into the formula, we get:Proceeds = 95,600.00 / (1 + (0.0149 / 12))^(27 * 2.5)= 95,600.00 / (1.00124167)^67.5= 95,600.00 / 1.085604= $92,220.90

A $95 60000, Non-Interest-Bearing Note Due August 1, 2017, Discounted on March