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Hafers, an electrical supply company, sold $4,800 of equipment to Jim Coates Wiring, Inc. Coates signed a promissory note May 12 with 4.5% interest. The due date was August 10. Short of funds, Hafers contacted Charter One Bank on July 20; the bank agreed to take over the note at a 6.2% discount. (Use Days in a year table.) What proceeds will Hafers receive? (Use 360 days a year. Do not round intermediate calculations. Round your final answer to the nearest cent.)

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Answer:

The Net value of the Note is $4836.44

Explanation:

Days between May 12 to May 31st = 19

Days in June=30

Days in July = 31

Days in August = 10

Total Days=19+30+31+10=90

Loan Interest

4800 * 90/360 * 4.5/100

= $54

Total Amount due = Face Value+Loan Interest

                               =$4800+54

                               =$4854

Now the days left in maturity are given as

Days between July 20 and August 10 =21 days

Total Number of Days in the year is 360

Rate of Discount is 6.2% so

4854 * 21/360 * 6.2/100

Discount by bank is $17.56

So the net value of the note is given as

Net Value=Amount Due-Discount

                =$4854-$17.56

                =$4836.44

So the Net value of the Note is $4836.44

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