Asked by Adnan Za`aqiq on May 15, 2024
Verified
Annamarie Weymeyer held a $3,750, 120-day, non-interest-bearing note dated July 24. On August 16, she took the note to First Bank of the Plains which discounted the note at 10%. Use a 365-day year to find the missing information on the loan.
Non-Interest-Bearing Note
A type of debt instrument that does not pay interest to the holder, instead being issued at a discount to its redemption value.
Discount Rate
The interest rate used to discount future cash flows to their present value; often reflects the risk-free interest rate.
- Figure out the rebate values and gains from a range of loan arrangements.
- Apply knowledge of non-interest-bearing notes and how they are discounted.
- Evaluate the authentic interest rate from proceeds as opposed to the face value, with the inclusion of different day counts (365-day and 360-day years).
Verified Answer
MD
Learning Objectives
- Figure out the rebate values and gains from a range of loan arrangements.
- Apply knowledge of non-interest-bearing notes and how they are discounted.
- Evaluate the authentic interest rate from proceeds as opposed to the face value, with the inclusion of different day counts (365-day and 360-day years).
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