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gabetrojanowski1936
15.07.2020 •
Business
On Oct. 14, Sheffield Company discounted at Sunshine Bank a $9,000 (maturity value), 113-day note dated July 13. Sunshine’s discount rate was 11%.
Required:
What proceeds did Sheffield Company receive?
Solved
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Ответ:
$8,945
Explanation:
Number of days that have passed since Note was issued is;
18 days in July
31 days in August
30 Days in September, and
14 days in October
= 18 + 31 + 30 + 14
= 93 days
93 days have already elapsed out of the 113 so days left is;
= 113 - 93
= 20 days
Assuming a 360 day Calender, Sheffield Company will receive;
= Maturity level - Discount Amount
= 9,000 - (9,000 * 11% * 20/360)
= 9,000 - 55
= $8,945
Sheffield would will get $8,945 of proceeds to represent that 20 days are still left of the note till it matures and so need to be discounted from the maturity value.
Ответ:
Risk-Sharing.
Prevention of loss.
It Provides Capital.
It Improves Efficiency
It helps Economic Progress