Karim Darmati holds a note of $7,000 that has a discount rate of 14%. The note was made on March 8 and is due October 19. Karim sells the note to First City Bank on July 16 at a discount rate of 10%. Find the proceeds to Karim.

Be sure to change the date worksheet to a 360-day year before calculating number of days. Round your answer to the nearest whole dollar.

Question

Kathy Case

Mathematics

23 August, 20:37

Karim Darmati holds a note of $7,000 that has a discount rate of 14%. The note was made on March 8 and is due October 19. Karim sells the note to First City Bank on July 16 at a discount rate of 10%. Find the proceeds to Karim.

Be sure to change the date worksheet to a 360-day year before calculating number of days. Round your answer to the nearest whole dollar.

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Briley Mack · Answer 1

It appears as though the "proceeds to Karim" would be the value of the discounted note on July 16. The maturity date is 3 months and 3 days hence, so the proceeds would be

... P * (1 - rt) = $7000 * (1 - 0.10 * (93/360)) ≈ $6819