The payee on a 3-month $2,700 promissory note earning interest at 4% simple interest wishes to sell the note to raise some cash. What price should she be prepared to accept for the note (dated May 19) on June 5 in order to yield the purchaser a 7% rate of return?

Promissory Note

A monetary tool involving a formal commitment from one party to compensate another party with a specific amount of money, either upon request or at an agreed future time.

Simple Interest

Interest reckoned only on the initial capital, disregarding compounded sums.

Yield

The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost.