Promissory NotE. GT10103 Business Mathematics Prepared by : Kasturi Rajoo Alfera Jausin. Learning Objectives. Explain the meaning and list the main features of a promissory note, Compute the face and maturity values of promissory notes,
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Prepared by : KasturiRajoo
Explain the meaning and list the main features of a promissory note,
Compute the face and maturity values of promissory notes,
Compute bank discounts and the proceeds obtained when a promissory note is discounted.
Compute simple interest rate that a bank earns when a promissory note is discounted.
To find the maturity value :-
Maturity value = face value + interest due
To find the face value :-
S = P(1 + rt)
I = Prt, where P is face value
To find the bank discount :-
D = Sdt
To find the proceeds :-
P = S-D
P = S-Sdt
P = S(1-dt)
To find the equivalent simple interest rate :-
r = d/1 – dt
To find discount rate :-
r = r/1 + rt