I know this is a chicken forum, but my son is in need of some serious help with this math question. We have looked and searched and looked and searched and still can't figure out how to do this problem. HELP! Here's the question: An investment company owns a 10-year, 6% simple interest note that has a face value of $50,000. A bank agrees to purchase the note 3 years before it is due by discounting it at 9%. Find (A) the maturity value of the note, (B) the discount, and (C) the proceeds. We are not necessarily looking for the answers, but would love someone to help show us the correct formula here. I honestly don't understand where this question even comes into play in his business math course. There isn't one place in his book that even explains this. Thank you!
I'm assuming "simple interest" compounds once per year, right? (You didn't provide any definitions for the terms in the problem). The way I am guessing, every year, the note would earn 6% interest. Year One = (.06x$10,000)+$10,000 Year Two = (.06xAnswer to Year One)+Answer to Year One Year Three = (.06xAnswer to Year Two)+Answer to Year Two etc. etc. etc. The answer the Year Six would be the answer to part (A). In year seven, the bank decides to buy it, but the price is reduced by 9%. Take the answer to Year Six and multiply it by .09. That would be (B), the discount. Subtract that amount from the answer to Year Six. That would be (C), the proceeds. I *think* I'm right, but if I'm not, I won't be offended. I'm an English major that made it through high school calculus with B+s and As, so I basically look at math as brain teasers... If I'm right, I'm right, and if I'm wrong, I must have forgotten something since then.
I provided all the information that the question provided. See why we were so confused?!?! You have been a life saver Chicken Lady! Many, many, many thanks! the1much - Thank you for your attempt also.
I used to be so good at math. If my mom was home she would have got had the answer in no time. She is really really good at it.
Quote:It's done! It's done! It's done! WOO-HOO! I really can't thank you enough! I am so grateful that this is finished. He had this one last question to do and his Business Math course is finished. Thank you again!
I was a member of BYC many years ago. I don't know when the forum changed, but I signed back up under my original name. Anywho, A professor friend has created a great tutorial web site that has all the calculators and learning tools needed for school minded people. take a look. I wish I had these when I was in school. http://www.emathlearning.com/ ..................................................
