Question 1

Proceeds of a simple discount note equals amount borrowed minus bank discount.

Accepted Answer

A) True 
 B)False

Question 2

The effective rate of a $30,000 non-interest-bearing simple discount 5%, 60-day note is:

Accepted Answer

A)  5.0% 
B)  5.04% 
C)  6.0% 
D)  5.14% 
E)  None of these 
A)  5.0% 
B)  5.04% 
C)  6.0% 
D)  5.14% 
E)  None of these

Question 3

A $25,000, 15%, 80-day note dated November 5, is discounted at National Bank on January 5. The discount period is:

Accepted Answer

A)  80 days 
B)  19 days 
C)  61 days 
D)  91 days 
E)  None of these 
A)  80 days 
B)  19 days 
C)  61 days 
D)  91 days 
E)  None of these

Question 4

The bank discounts an $8,750 non-interest-bearing simple discount note at 6% for 60 days. What is the discounted amount?

Accepted Answer

A)  $8.75 
B)  $78.50 
C)  $86.30 
D)  $87.50 
E)  None of these 
A)  $8.75 
B)  $78.50 
C)  $86.30 
D)  $87.50 
E)  None of these

Question 5

Compute bank discount using (A) ordinary interest, (B) proceeds, and (C) effective interest rate to nearest hundredth. Do not round denominator in your calculation.
   
A. $520;
B. $11,480;
C. 13.59%

Accepted Answer

The answer of Compute bank discount using (A) ordinary interest,...

Question 6

Jill Corporation accepted a $16,000 note on Aug. 12. Terms of the note were 13% for 100 days. Jill discounted the note on September 28, at the Reno Bank at 14%. The proceeds to Jill would be:

Accepted Answer

A)  $341.69 
B)  $16,236.09 
C)  $303.00 
D)  $16,277.78 
E)  None of these 
A)  $341.69 
B)  $16,236.09 
C)  $303.00 
D)  $16,277.78 
E)  None of these

Question 7

Maturity value of a non-interest-bearing note is:

Accepted Answer

A)  Less than face value 
B)  Sometimes equal to face value 
C)  Greater than face value 
D)  Same as the face value 
E)  None of these 
A)  Less than face value 
B)  Sometimes equal to face value 
C)  Greater than face value 
D)  Same as the face value 
E)  None of these

Question 8

The purchase price (or proceeds) of a Treasury bill would be the value of the Treasury bill plus the discount.

Accepted Answer

A) True 
 B)False

Question 9

A $15,000, 11%, 120-day note dated Sept. 3, is discounted on Nov. 11. Assuming a bank discount rate of 9%, the proceeds would be:

Accepted Answer

A)  $15,550.00 
B)  $15,351.74 
C)  $15,531.74 
D)  $15,135.47 
E)  None of these 
A)  $15,550.00 
B)  $15,351.74 
C)  $15,531.74 
D)  $15,135.47 
E)  None of these

Question 10

The maturity date of a promissory note represents when only the principal is due.

Accepted Answer

A) True 
 B)False

Question 11

On May 7, Ralph Blue accepted a $5,000 note from Dick Shea. Terms of the note were 7% for 180 days. On Aug. 19, Ralph could no longer wait for the money and discounted the note at Tover Bank at a discount rate of 8%. Calculate Ralph's proceeds. Use ordinary interest.

Accepted Answer

The answer of On May 7, Ralph Blue accepted a...

Question 12

The maturity value of an interest-bearing note is principal minus interest.

Accepted Answer

A) True 
 B)False

Question 13

Lines of credit provide companies with additional financing that is immediately available to them.

Accepted Answer

A) True 
 B)False

Question 14

On October 15, Daniel Miller accepted a $5,000, 60-day, 8% note from Bill Boyer granting a time extension on a past-due amount. Daniel discounted the note at Volve Bank at 9% on Oct. 26. Use ordinary interest. Calculate Daniel's proceeds.

Accepted Answer

The answer of On October 15, Daniel Miller accepted a...

Question 15

Shelley Corporation discounted a $7,000, 90-day note dated June 18, at the Sunshine Bank on July 18 at a discount rate of 12%. (Assume the $7,000 is the maturity value.) The amount of bank discount is:

Accepted Answer

A)  $70 
B)  $210 
C)  $140 
D)  $240 
E)  None of these 
A)  $70 
B)  $210 
C)  $140 
D)  $240 
E)  None of these

Question 16

The maturity value of a $16,000 non-interest-bearing, simple discount 6%, 60-day note is:

Accepted Answer

A)  $16,160 
B)  $16,000 
C)  $16,610 
D)  $16,600 
E)  None of these 
A)  $16,160 
B)  $16,000 
C)  $16,610 
D)  $16,600 
E)  None of these

Question 17

On May 12, Joy Co. accepted a $1,000, 60-day, 6% note from Abe Wills, granting a time extension on a past-due account. Joy discounted the note at the bank at 9% on May 28. Use ordinary interest. Calculate Joy's proceeds.

Accepted Answer

The answer of On May 12, Joy Co. accepted a...

Question 18

The maturity value of a $20,000, 7%, 75-day interest-bearing note dated September 10, is:

Accepted Answer

A)  $22,912.67 
B)  $20,291.67 
C)  $21,029.67 
D)  $22,219.76 
E)  None of these 
A)  $22,912.67 
B)  $20,291.67 
C)  $21,029.67 
D)  $22,219.76 
E)  None of these

Question 19

All interest-bearing notes must have the rate stated on the note.

Accepted Answer

A) True 
 B)False

Question 20

Ray Furniture wants to buy a dining room set for $7,000 with a 20% trade discount. Ray needs the cash to pay the bill and is considering discounting a 90-day note dated May 12, with a maturity value of $6,500 at Hunt Bank at a discount rate of 13% on June 5. The bank discount if Ray discounts the note is:

Accepted Answer

A)  $211.25 
B)  $1,400.00 
C)  $154.92 
D)  $212.15 
E)  None of these 
A)  $211.25 
B)  $1,400.00 
C)  $154.92 
D)  $212.15 
E)  None of these

Proceeds of a simple discount note equals amount borrowed minus bank discount.

The effective rate of a $30,000 non-interest-bearing simple discount 5%, 60-day note is:

A $25,000, 15%, 80-day note dated November 5, is discounted at National Bank on January 5. The discount period is:

The bank discounts an $8,750 non-interest-bearing simple discount note at 6% for 60 days. What is the discounted amount?

Compute bank discount using (A) ordinary interest, (B) proceeds, and (C) effective interest rate to nearest hundredth. Do not round denominator in your calculation. A. $520; B. $11,480; C. 13.59%

Jill Corporation accepted a $16,000 note on Aug. 12. Terms of the note were 13% for 100 days. Jill discounted the note on September 28, at the Reno Bank at 14%. The proceeds to Jill would be:

Maturity value of a non-interest-bearing note is:

The purchase price (or proceeds) of a Treasury bill would be the value of the Treasury bill plus the discount.

A $15,000, 11%, 120-day note dated Sept. 3, is discounted on Nov. 11. Assuming a bank discount rate of 9%, the proceeds would be:

The maturity date of a promissory note represents when only the principal is due.

On May 7, Ralph Blue accepted a $5,000 note from Dick Shea. Terms of the note were 7% for 180 days. On Aug. 19, Ralph could no longer wait for the money and discounted the note at Tover Bank at a discount rate of 8%. Calculate Ralph's proceeds. Use ordinary interest.

The maturity value of an interest-bearing note is principal minus interest.

Lines of credit provide companies with additional financing that is immediately available to them.

On October 15, Daniel Miller accepted a $5,000, 60-day, 8% note from Bill Boyer granting a time extension on a past-due amount. Daniel discounted the note at Volve Bank at 9% on Oct. 26. Use ordinary interest. Calculate Daniel's proceeds.

Shelley Corporation discounted a $7,000, 90-day note dated June 18, at the Sunshine Bank on July 18 at a discount rate of 12%. (Assume the $7,000 is the maturity value.) The amount of bank discount is:

The maturity value of a $16,000 non-interest-bearing, simple discount 6%, 60-day note is:

On May 12, Joy Co. accepted a $1,000, 60-day, 6% note from Abe Wills, granting a time extension on a past-due account. Joy discounted the note at the bank at 9% on May 28. Use ordinary interest. Calculate Joy's proceeds.

The maturity value of a $20,000, 7%, 75-day interest-bearing note dated September 10, is:

All interest-bearing notes must have the rate stated on the note.

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

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Exam 11: Promissory Notes, Simple Discount Notes, and the Discount Process

Proceeds of a simple discount note equals amount borrowed minus bank discount.

The effective rate of a $30,000 non-interest-bearing simple discount 5%, 60-day note is:

A $25,000, 15%, 80-day note dated November 5, is discounted at National Bank on January 5. The discount period is:

The bank discounts an $8,750 non-interest-bearing simple discount note at 6% for 60 days. What is the discounted amount?

Compute bank discount using (A) ordinary interest, (B) proceeds, and (C) effective interest rate to nearest hundredth. Do not round denominator in your calculation. A. $520; B. $11,480; C. 13.59%

Jill Corporation accepted a $16,000 note on Aug. 12. Terms of the note were 13% for 100 days. Jill discounted the note on September 28, at the Reno Bank at 14%. The proceeds to Jill would be:

Maturity value of a non-interest-bearing note is:

The purchase price (or proceeds) of a Treasury bill would be the value of the Treasury bill plus the discount.

A $15,000, 11%, 120-day note dated Sept. 3, is discounted on Nov. 11. Assuming a bank discount rate of 9%, the proceeds would be:

The maturity date of a promissory note represents when only the principal is due.

On May 7, Ralph Blue accepted a $5,000 note from Dick Shea. Terms of the note were 7% for 180 days. On Aug. 19, Ralph could no longer wait for the money and discounted the note at Tover Bank at a discount rate of 8%. Calculate Ralph's proceeds. Use ordinary interest.

The maturity value of an interest-bearing note is principal minus interest.

Lines of credit provide companies with additional financing that is immediately available to them.

On October 15, Daniel Miller accepted a $5,000, 60-day, 8% note from Bill Boyer granting a time extension on a past-due amount. Daniel discounted the note at Volve Bank at 9% on Oct. 26. Use ordinary interest. Calculate Daniel's proceeds.

Shelley Corporation discounted a $7,000, 90-day note dated June 18, at the Sunshine Bank on July 18 at a discount rate of 12%. (Assume the $7,000 is the maturity value.) The amount of bank discount is:

The maturity value of a $16,000 non-interest-bearing, simple discount 6%, 60-day note is:

On May 12, Joy Co. accepted a $1,000, 60-day, 6% note from Abe Wills, granting a time extension on a past-due account. Joy discounted the note at the bank at 9% on May 28. Use ordinary interest. Calculate Joy's proceeds.

The maturity value of a $20,000, 7%, 75-day interest-bearing note dated September 10, is:

All interest-bearing notes must have the rate stated on the note.

Whole Numbers: How to Dissect and Solve Word Problems

Fractions

Decimals

Banking

Solving for the Unknown: a How-To Approach for Solving Equations

Percents and Their Applications

Discounts: Trade and Cash

Markups and Markdowns: Perishables and Breakeven Analysis

Payroll

Simple Interest

Compound Interest and Present Value

Annuities and Sinking Funds

Installment Buying

The Cost of Home Ownership

How to Read, Analyze, and Interpret Financial Reports

Depreciation

Inventory and Overhead

Sales, Excise, and Property Taxes

Filters