Ada signed a simple discount promissory note for $5,500. the discount rate is 12%, and the term of the note is 5 months. what are ada's proceeds on the loan?

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31 January, 11:03

Ada signed a simple discount promissory note for $5,500. the discount rate is 12%, and the term of the note is 5 months. what are ada's proceeds on the loan?

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Blayne · Answer 1

Given that, Promissory note A = 5,500 Discount rate i = 12% i = 12/100 Term n = 5 months we know that, 1 year = 12 months 5 months = 5/12 So we get, A = 5,500 i = 12/100 n = 5/12 To find the ada's proceeds on the loan formula is, Proceeds=A (1+i) ^n ... (1) Put the value of A, i, n in equ (1) Proceeds=5500 (1+12/100) ^5/12 = 5500 (1+0.12) ^0.417 = 5500 (1.12) ^0.41667 = 5500 (1.04835) Proceeds=5765.94 Therefore $5765.94 Proceeds on the loan