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An investor purchased a promissory note on June 15 for $27,329.96 using a negotiated interest rate...

An investor purchased a promissory note on June 15 for $27,329.96 using a negotiated interest rate of 10.5%. The promissory note had been issued on April 2 for a term of eight months at an interest rate of 9.25%. Calculate the original face value of the promissory note.

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Answer #1

Since investor purchased at a interest rate of 10.5%.

Now the purchase value is brought to maturity value using above rate.

Now by using the maturity value and interest rate of 9.25% for the promissory note period Maturity value is discounted to PRESENT VALUE i.e FACE VALUE.

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