Promissory Notes, Simple Discount Notes, and the Discount Process
1. Kendra signed a promissory note for $5,900 at 12% ordinary interest for 180 days. Find the
interest and amount due she will pay when the note is due.
2. Find the ordinary interest from November 8 to November 22 on $750 at 9% interest.
3. A refrigerator sells for $1,044 on the installment plan. After making a down payment of $100,
you pay $59 a month. How many months will it take to pay for the refrigerator?
4. Andre Fox borrowed $15,000 on a non-interest-bearing, simple discount, 7 1/2% 90-day note. Assume ordinary interest. What is (a) maturity value, (b) the bank's discount, (c) Andre's proceeds, and (d) the effective rate to nearest hundredth percent?
5. Joy Lindman buys a $10,000 13-week Treasury bill at 8 1/4% What is her effective rate? Round
to the nearest hundredth percent.
6. Frost Corporation accepted a $20,000, 8%, 90-day note on July 8. Frost discounts the note on
September 6 at East Bank at 9%. What proceeds did Frost receive?
7. Agnes Abanilla was granted a loan of $20,000 by her employer CPM Industrial Fabricator and
Construction Corporation with an interest of 6% for 180 days on the principal collected in advance. The corporation would accept a promissory note for $20,000 non-interest for 180 days. If discounted at once, find the proceeds of the note.
8. On May 12, Scott Rinse accepted an $8,000, 12%, 90-day note for a time extension of a bill for goods bought by Ron Prentice. On June 12, Scott discounted the note at Able Bank at 10%. What proceeds does Scott receive?
9. Calculate the discount period for the bank to wait to receive its money:
Date of note Length of note Date note discounted Discount period
(a)April 12 45 days May 2 ?
(b) March 7 120 days June 8 ?
10. Tina Mier must pay a $2,000 furniture bill. A finance company will loan Tina $2,000 for 8 months at a 9%
discount rate.The finance company told Tina that if she wants to receive exactly $2,000, she must borrow more than $2,000. The finance company gave Tina the following formula:
What to ask for = Amount in cash to be received
1 – (Discount X Time of Loan)
Calculate Tina’s loan request and the effective rate of interest to the nearest hundredth percent.
