Asked by Kayla Valdes on Jun 20, 2024
Verified
Juan Munoz held a $1,170, 45-day, non-interest-bearing note dated March 30. On April 30, he took the note to Southwest Equity Loans which discounted the note at 12%. Use a 365-day year to find the missing information on the loan.
Non-Interest-Bearing Note
A debt instrument that does not accrue interest over time, meaning the borrower repays only the original amount borrowed.
Discount Rate
An interest rate that the Federal Reserve charges banks for short-term loans, influencing economic activity by setting the cost of borrowing money.
- Determine the value of deductions and the revenue generated from assorted loan types.
- Implement proficiency in the discounting process of non-interest-bearing notes.
- Compute the genuine interest rate from proceeds, not the face value, employing different day counts (365-day and 360-day years).
Verified Answer
DK
Learning Objectives
- Determine the value of deductions and the revenue generated from assorted loan types.
- Implement proficiency in the discounting process of non-interest-bearing notes.
- Compute the genuine interest rate from proceeds, not the face value, employing different day counts (365-day and 360-day years).
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