Question

Use the ordinary interest method, 360 days, to solve the following word problem. Round to the nearest cent when necessary.

Pinnacle Manufacturing received a $37,000 promissory note at 9% simple interest for 94 days from one of its customers. On day 56, Pinnacle discounted the note at the Berryville Bank at a discount rate of 12%. The note was made on September 6.

a. What was the maturity date of the note?

-Select-OctoberNovemberDecemberJanuaryFebruaryItem 1

b. What was the maturity value of the note?
Do not round intermediate calculations.

$

c. What was the discount date of the note?

-Select-SeptemberOctoberNovemberDecemberJanuaryItem 4

d. What proceeds did Pinnacle receive after discounting the note?
Do not round intermediate calculations.

$

Answer 1

a) Maturity date of note

= 24 days of september + 31 days of october + 30 days of november and 9 days of december

Thus 9th december is maturity date

b) maturity value =37000 + (37000*9%*94/360)

=37000 + 869.5

=37869.5$

c) Discount date

24 days of september + 31 days of october +1 day of novemebr

Thus , 1st novemebr is discount date

d) Value of note as on 1 st november

=37000+(37000*9%*56/360)

=37000 + 518

=37518$

Dicounted value /proceeds from note = 37518 * 0.88 = 33015.844