Mark signs a note promising to pay $825 in 3.5 years with simple interest at 10.75%. Then, 9 months before the note comes due, the holder of the note sells it to a local bank whichdiscounts the note based on a bank discount rate of 18%.(a) What did the bank pay the holder of the note when it was sold 9 months before maturity?$X

The promissory notes are those legal instruments where one party promises to pay a sum of money to…

Answered: Mark signs a note promising to pay $825…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Every year on 1st January between 2020 and 2049 inclusive (so 30 times), you deposit $1,000 into a bank account. Each year, the bank account returns a rate of interest equal to that year less 2000. (So in 2020, the account earns 20%, in 2021, 21% etc). How much will you have in the bank account on 31st December 2049, just after that year's interest has been paid? A $35,734,347.81 B $35,734,347.82 C $35,734,347.83 D $35,734,347.84
5. Jim lends $8000 to Sally on September 23, 2006. Sally signs a promissory note, with the note due in 10 months. The maturity value of the note is $8695. Jim sells the note to a bank on February 23, 2007. If the bank wishes to earn 4%4%, what price does Jim get for the note?
10
Suppose Jorge Otero has set up an annuity due with a certain credit union. At the beginning of each month, $130 is electronically debited from his checking account and placed into a savings account earning 6% interest compounded monthly. What is the value (in $) of Jorge's account after 17 months? (Round your answer to the nearest cent.)
If you sign a discount note for $7,500 at a bank discount rate of 5% for 3 months, what is the effective interest rate? Round to the nearest tenth percent. Step 1 The effective interest rate is the actual interest rate charged on a discounted note and takes into account the fact that the borrower does not receive the full amount of the principal. It is calculated using the bank discount, the proceeds, and time. The bank discount is calculated as follows where the discount rate is given as a decimal and the time will be a fraction whose numerator is the given amount of time in months and denominator is 12 months. bank discount = face value ✕ discount rate ✕ time The rate was given to be 5%. As a decimal, we have . Calculate the bank discount (in $) for the $7,500 promissory note at a discount of 5% for 3 months. bank discount = face value ✕ discount rate ✕ amount of time in months 12 months = $7,500 ✕ ✕ 3 12 = $
You deposit $ 7,812 in your account today. You make another deposit at t = 1 of $ 6,946 . How much will there be in your account at the end of year 1 if the interest rate is 11.9 percent p.a.? (Record your answer without a dollar sign, without commas and round your answer to 2 decimal places; that is, record $3,245.847 as 3245.85). Your Answer:
19. Misk, Inc. received from a customer a one-year, $750,000 note bearing annual interest of 9%. After holding the note for six months, Misk discounted the note at National Bank at an effective interest rate of 12%. What amount of cash did Misk receive from the bank?
Compare the net present values of two certificates of deposit available to Helga, one at Bank Alpha with the purchase price $1,000 and redemption value of $1,250 at the end of two years, the other at Bank Beta with purchase price $1,000 and redemption value $1,300 at the end of three years, first using the discount rate of 5% and next using the discount rate of 3%.
You invest $ 4,060 in an account today. You make no additional deposits into the account. One year from today there is $ 5,140 in the account. What is the nominal interest rate that you earned on your money? (Record your answer as a percent rounded to 1 decimal place; for example, record .527945 = 52.8% as 52.8). Your Answer:
If you withdraw part of your money from a certificate of deposit before the date of maturity, you must pay an interest penalty. Suppose you invested $7000 in a one-year certificate of deposit paying 8.1% interest. After 6 months, you decide to withdraw $7000. Your interest penalty is 3 months simple interest on the $7000. What interest penalty do you pay? (Round your answer to two decimal places)
You deposit $2,000 at the end of the year (k = 0) into an account that pays interest at a rate of 6% compounded annually. A year after your deposit, the savings account interest rate changes to 12% nominal interest compounded monthly. Five years after your deposit, the savings account again changes its interest rate; this time the interest rate becomes 8% nominal interest compounded quarterly. Nine years after your deposit, the saving account changes its rate once more to 5% compounded annually. a. How much money should be in the savings account 17 years after the initial deposit, assuming no further changes in the account's interest rate? b. What interest rate, compounded annually, is equivalent to the interest pattern of the saving account in Part (a) over the entire 17 year period?
Happy Company sold a machine in exchange for a P750,000, 5-year, 14% note; interest is payable annually. How much is the total amount of interest collected for this note for 5 years? tart How much cash will be collected at the end of the term of the note? ssments ( Previous rences fessors

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