SOLUTION: Please help me solve the following financial mathematics problem: 1. A promissory note dated 1 April 2021 for R1500, borrowed at a simple discount rate of 16% p.a. due on the 1 Oc

Click here to see ALL problems on Finance

Question 1194071: Please help me solve the following financial mathematics problem:
1. A promissory note dated 1 April 2021 for R1500, borrowed at a simple discount rate of 16% p.a. due on the 1 October 2021 is sold on the 1 July 2021.
1.1. what is the maturity value of the note?
1.2. what is the present value on the date of sale?
Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website!
looks to me that the duration of the loan is 183 days.
30 days in april.
31 days in may
30 days in june
31 days in july
31 days in august
30 days in september
assuming that is correct, the interest on the loan will be equal to 1500 * .16 * 183 / 365 = 120.33 rounded to the nearest penny.
add that to the principal of 1500 to get an amount due of 1620.33.
that's the maturity value of the note.
the present value of the note is 1500.
the formula used is:
f = p + p * r * t
f is the future value = the maturity value of the note.
p is the present value of the note = the amount of the loan.
r is the interest rate per year = .16
t is the number of years = 183/365.
there may be differences in how the days of the loaon are calculated, but the formula will be the same.