Mr. Jun Ramos was granted a loan of P20,000 by his employer Excel First Review and Training Center, Inc. with an interest of 6% for 180 days on the principal collected in advance. The corporation would accept a promissory note for P20,000 non-interest for 180 days. If discounted at once, find the proceeds of the note.

Question

Mr. Jun Ramos was granted a loan of P20,000 by his employer Excel First Review and Training Center, Inc. with an interest of 6% for 180 days on the principal collected in advance. The corporation would accept a promissory note for P20,000 non-interest for 180 days. If discounted at once, find the proceeds of the note.

Answer

To find the proceeds of the note when discounted at once, we need to calculate the interest that would have been earned on the note if it were not discounted and then subtract that interest from the face value of the note.

Calculate the interest earned if not discounted: Interest = Principal x Rate x Time Interest = 20000PHP x 0.06(6%) x (180/360)years.

So Interest = 20,000PHP x 0.06 x 0.5

Therefore Interest = 600PHP

Find the face value of the note: The face value of the note is 20,000PHP.

Calculate the proceeds of the note when discounted at once:

Proceeds = Face Value – Interest

Proceeds = 20,000PHP – 600PHP = 19,400PHP

Explanation:

So, the proceeds of the note when discounted at once would be 19,400 PHP.

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