Question

If a 90-day bill with a face value of $100,000 is issued at an annual discount rate of 6.75%, what will be the net proceeds of the issue after paying an acceptance fee of $100?

          A.      $98,124.87

          B.      $98,262.86

          C.      $92,807.42

          D.      $98,024.87

Answer 1

answer:

given data"

• 90-day bill with a face value of $100,000
• annual discount rate of 6.75%

to find the net proceeds of the issue after paying an acceptance fee of $100?

here we know the formula is net proceeds=face value* (1+annual discount rate/4)-(face value - acceptance fee)

•    now substitute the values in the formula.
• net proceeds=$100000*(1+6.75%/4)-($100000-$100) (here asssume annual rate is in to 4 )

=$100000*1.9375-($99900)

   =193750-99900

=93850.

net proceeds is ( 93850)

• so finally this answer is near to the option b