Reference no: EM132812920

Question - Prommisory Notes

Q1. Gene sells Note 1 below to Dennis on Jan 1, Y + 1. What does Dennis pay if he is willing to pay at 7% simple interest?

NOTE 1: Three years and 9 months after Jan 1, Y, Abel promises to pay Gene or order 1,000 and accumulated interest from this date at the rate 6% simple interest.

Q2. A 3-month promissory note for 2,000, dated Apr. 20, Y and earning simple interest at 7% is to be sold in order to raise some needed cash. Determine the proceeds of the note if it is sold on June 20, Y to yield the purchaser a 9% simple rate of return.

Q3. If the note is priced on Nov 12, Y at 5.85% simple interest, find the price at which it is sold.

12,500 Oct. 27, Y

Ninety days after date Shane Smith promises to pay Mei-Lei the amount of twelve thousand five hundred plus an interest at the rate 5.92% simple interest.

If Shane will not pay the note in problem 4 when due. What should she pay to cancel the debt on Jan 1,Y+1, if it is agreed that money is worth 7% simple interest after the due date?

Q4. What amount of money will Mr. S accepts from the creditor on June 1, Y to settle a debt of 8,500 due on July 1, Y + 5, if the discount rate is 5%?

Q5. DRF Financing borrows a certain amount from ABC Bank on Sept 1, Y and signs a promissory note to pay the bank a total of 25,000 at the end of 7 years. The bank sells this note to XYZ Lending on Sept 1, Y+4. If XYZ Corporation insists on discounting the note at the discount rate 5%, what will be the payment of XYZ Lending?