Ahmad received a 60 days, 10% interest bearing note which is dated on 3 April 2023. Then, 30 days before maturity date, he went to bank to discount the note with 4% interest rate and received RM2500. Determine:
a. the maturity date (Answer - 2 June 2023)
b. the maturity value of the note (Answer - RM 2508.36)
c. the bank discount (answer 8.36)
d. the face value of the note (answer 2467.24)
To solve this problem, we need to calculate the following:
a. Maturity date:
The maturity date can be calculated by adding the number of days in the note to the date it was dated.
Date of note = 3 April 2023
Maturity date = 3 April 2023 + 60 days
Maturity date = 2 June 2023
b. Maturity value of the note:
To calculate the maturity value of the note, we use the formula:
Maturity value = Face value + (Face value x Interest rate x Time)
Maturity value = Face value + (Face value x 10% x 60/360)
Maturity value = Face value + (Face value x 0.1 x 0.1667)
Maturity value = Face value + 0.01667 x Face value
Maturity value = 1.01667 x Face value
Given that Ahmad received RM2500 when he discounted the note, we can set up the equation:
2500 = 1.01667 x Face value
Face value = 2500 / 1.01667
Face value ≈ RM2467.24
c. Bank discount:
The bank discount can be calculated by subtracting the amount received when discounting the note from the face value.
Bank discount = Face value - Amount received
Bank discount = RM2467.24 - RM2500
Bank discount = -RM8.36 (negative because it is an expense for Ahmad)
Therefore, the answers are:
a. Maturity date = 2 June 2023
b. Maturity value of the note = RM2508.36
c. Bank discount = RM8.36
d. Face value of the note = RM2467.24