Asked by tatiana lopez on Apr 24, 2024
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Reed Lyons held a $1,790, 60-day note dated December 22, bearing interest at 9%. On January 11, he took the note to Surety Financing Company which discounted it at 13%. Use a 365-day year to find the missing information on the loan.
Surety Financing Company
A surety financing company provides financial guarantees for obligations made by the principal, ensuring contract completion in the event of default.
Discounted
A reduction applied to the regular price of products or services, often used as an incentive for customers.
- Ascertain the maturity value of notes utilizing distinctive day count methods, specifically the 360-day and 365-day year techniques.
- Perform calculations of discounts on loans and acquire an understanding of the fundamentals of the discount method.
- Cultivate the ability to evaluate and calculate the genuine interest rates using the proceeds in lieu of the loan's nominal value.
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Learning Objectives
- Ascertain the maturity value of notes utilizing distinctive day count methods, specifically the 360-day and 365-day year techniques.
- Perform calculations of discounts on loans and acquire an understanding of the fundamentals of the discount method.
- Cultivate the ability to evaluate and calculate the genuine interest rates using the proceeds in lieu of the loan's nominal value.