Question

Kylah Enterprises signs a 3-month, noninterest-bearing note with a stated rate of 13.5% and a maturity value of $215,000? What is the cash proceeds available to the borrower?

Answer 1

Cash proceeds $ 2,07,980.65

Cash proceeds is the present value of cash flow from notes.
Present value of cash flow from notes	=	Maturity Value	*	Discount factor
	=	$       2,15,000	*	0.967352
	=	$ 2,07,980.65
Working:
Discount factor	=	(1+i)^-n		Where,
	=	(1+0.03375)^-1		i	=	13.5%*3/12	=	0.03375
	=	0.967351874		n			=	1