Answered: What price did the finance company pay…

What price did the finance company pay for the promissory note? What rate of interest did the original owner of the note get?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A 180-day promissory note for $3,500 was issued on November 8, 2014, with interest at 6% p.a. It was sold 80 days later to a finance company at a discount rate of 9% p.a. What price did the finance company pay for the promissory note? What rate of interest did the original owner of the note get?

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