Answered

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There are some excellent free personal finance apps available: Mint, GoodBudget, Mvelopes, BillGuard, PocketExpense, HomeBudget, and Expensify. After using Mint, you realize you need to pay off one of your high interest loans to reduce your interest expense. You decide to discount a $5,250, 345-day note at 3% to your bank at a discount rate of 4.5% on day 210. What are your proceeds

Sagot :

Answer: $5309.86

Explanation:

The proceeds will be calculated as:

Face value of note = $5250

Interest rate = 3%

Note tenure = 345

Number of days used = 360

Outstanding interest on note = $5250 × 3% × 345/360 = $150.94

Gross Proceeds = $5250 + $150.94 = $5400.94

Bank Discount rate = 4.5%

Discounting days = 210

Time if maturity left = 345 - 210 = 135

Discount rate for 135 days = 4.5%/360 × 135 = 1.69%

Discount value = $5400 × 1.69% = $91.14

Net proceeds after discount = $5400 - $91.14 = $5309.86

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