Asked by Allison Bartley on May 25, 2024
Verified
Deidra Holmes held a $2,800, 90-day note dated April 28, bearing interest at 11%. On June 12, she took the note to Great Northern National Bank which discounted it at 16.5%. Use a 365-day year to find the missing information on the loan.
Discounted
The process of determining the present value of a future amount, or stream of payments, by applying a discount rate.
- Evaluate the maturity value of notes by executing calculations based on distinct day counts, including the 360-day and 365-day year.
- Process discount valuations on loans and master the basics of the discount strategy.
- Build the competence to figure out and assess the actual interest rates with the use of proceeds against the nominal value of the loan.
Verified Answer
PC
Learning Objectives
- Evaluate the maturity value of notes by executing calculations based on distinct day counts, including the 360-day and 365-day year.
- Process discount valuations on loans and master the basics of the discount strategy.
- Build the competence to figure out and assess the actual interest rates with the use of proceeds against the nominal value of the loan.