Asked by Kylee Israelsen on Jul 01, 2024
Verified
The proceeds from discounting a $20,000, 60-day, note payable at 6% is $20,200.
Discounting
The process of determining the present value of a payment or a stream of payments that is to be received in the future.
Note Payable
A financial obligation or loan documented by a written promissory note specifying repayment terms.
- Gain insight into the process of determining and stating interest on notes payable.
Verified Answer
SR
Sunny Rehal6 days ago
Final Answer :
False
Explanation :
The proceeds from discounting a note payable are less than the face value of the note because the discount amount (interest) is subtracted from the face value. In this case, the interest for a $20,000 note for 60 days at a 6% annual rate would be calculated and subtracted from $20,000, not added to it.
Learning Objectives
- Gain insight into the process of determining and stating interest on notes payable.