When a company sells a customer's note to a bank, the discount rate is the interest rate charged by the bank.
Correct option is a.
Selling a customer note to bank means taking advance from bank against the note. Thus discounting of notes means lending by bank. Thus, discounting is done at the interest rate charged by the bank.
Kindly comment if you need further assistance.
Thanks‼!
26. When a company sells a customer's note to a bank, the discount rate is a....
The face value of a simple discount note is $4,000. The bank discount is calculated at 12% for 60 days. Use ordinary interest. Calculate: A bank discount B. proceeds C. maturity value D. Effective rate to the nearest hundredth percent
Bill Blank signed an $7,540 note at Citizen's Bank. Citizen's charges a 8.2% discount rate. Assume the loan is for 270 days. a. Find the proceeds. (Use 360 days a year. Round your intermediate calculations and final answer to the nearest cent.) Proceeds b. Find the effective rate charged by the bank. (Use 360 days a year. Do not round intermediate calculations. Round your answer to the nearest tenth percent.) Effective rate You were offered the opportunity to purchase either...
A man has a simple discount note for $6,200, at an ordinary bank discount rate of 8.53%, for 50 days. What is the effective interest rate using the banker's rule?
a man has a simple discount note for $6300, at ordinary bank discount rate of 8.72%, for 60 days. what is the effective interest rate? round to the nearest tenth of a percent
paul and sandy moege signed a $7500 note at citizens bank. citizen charges a 5.4% discount rate. assume the loan is for 270 days. find the proceeds and the effective rate charged by the bank. please show work
Sam Peters needs to calculate the effective interest rate of a simple discount note for $3,600, at an ordinary bank discount rate of 10%, for 130 days. Find the effective interest rate rounded to the nearest tenth of a percent. O A. 10.2% OB. 10.4% O C. 10.5% OD. 3%
Bank A charges a 7.75 percent annual percentage rate and interest is due at the end of the year. Bank B charges a 7 percent annual percentage rate and interest must be paid monthly. What is the effective annual rate charged by each bank?
Come and Go Bank offers your firm a discount interest loan with an interest rate of 9 percent for up to $21 million, and in addition requires you to maintain a 2 percent compensating balance against the face amount borrowed. What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Effective annual rate= %
Come and Go Bank offers your firm a discount interest loan with an interest rate of 10 percent for up to $26 million, and in addition requires you to maintain a 2 percent compensating balance against the face amount borrowed. What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Company X sells on a 7/24, net 68, basis. Customer Y buys goods with an invoice of $1,180. a. How much can Y deduct from the bill if it pays on day 24? (Round your answer to 1 decimal place.) Discount b. How many extra days of credit can Y receive if it passes up the cash discount? (Round your answer to the nearest whole.) Extra days of credit c. What is the effective annual rate of interest if Y...