SOLUTION: A 195-day non-interest bearing note dated June 27 was discounted on October 15 at 9 ¼ % discount rate. If the price of the note was P20,080.93, what was its face value ?

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Question 1190428: A 195-day non-interest bearing note dated June 27 was discounted on October 15 at 9 ¼ % discount rate. If the price of the note was P20,080.93, what was its face value ?
Answer by mananth(16946) About Me  (Show Source):
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Discounted Value = Face Value * (1 - Discount Rate * Time)
Here
Discounted Value = P20,080.93
Discount Rate = 9.25%
Time = 120 days ( June 27 to October 15)
divide by 360 ( days in a year used in financial calculations):
Time = 120 / 360 = 1/3
Plug the values into the formula
P20,080.93 = Face Value * (1 - 0.0925 * 1/3)
Face Value = P20,080.93 / (1 - 0.0925 * 1/3)
Face Value = P20,080.93 / 0.9717
Face Value = P20,642.45