TUTORIAL 2.

2: BANK DISCOUNT & PROMISSORY NOTES

REVIEW QUESTIONS

1. A company had a note dated 20 January 2019 for RM7,500 with interest at 5.5% per annum.
The term of the note was six months. The company discounts the note on 10 June 2019 at a
bank that charges a discount rate of 4%. What are the proceeds? (RM7,672.00)

2. Faridah receives a 60-day promissory note on 12 January 2019 with an interest rate of 4% per
annum simple interest. After 40 days, she discounts the note at a discount rate of 2% and
receives proceeds of RM11,000. Find
(a) the maturity date
(b) the maturity value
(c) the face value
(d) the amount of interest received by Faridah.
(12 March 2019, S=RM11,012.24, RM10,939.31, RM60.69)

3. On 10 June 2019, Sam received a 60-day promissory note with a face value of RM6,000 at an
interest rate of 5%. He then sold the note to a bank at a discount rate of 8% and received the
proceeds of RM6,023.11. Compute the maturity value of the note and the discount term.
(RM6,050, 20 days)

4. Marini borrows RM6,000 for six months at the discount rate of 6% from a bank. Find the bank
discount and the proceeds she receives. (RM180, RM5,820)

5. An obligation of RM8,400 is due in six months. What is the present value of this obligation at
a bank discount rate of 9%? (RM8,022)

6. A businessman needs RM12,000 for four months. What should the size of the loan be if his
bank charges a discount rate of 9.5%? (RM12,392.43)

7. Rosma receives a 90-day note with a simple interest rate of 8% per annum. The face value of
the note is RM9,000 and the maturity date is 20 November 2019. Find
(a) the date of the note
(b) the maturity value
(22 August 2019, RM9,180)

8. A bank discounts all short-term six-month loans at 10%. What is the equivalent simple interest
rate? (10.53%)

9. A note with a maturity value of RM5,260 was discounted 15 days before maturity. If the
proceeds were RM5,240.28, find the discount rate that was charged. (9%)

10. A six-month note would mature on 15 December 2019 with a maturity value of RM3,750. The
note is discounted two months before the maturity date and the proceeds received are
RM3,718.75. Find
(a) the date of the note
(b) the discount date
(c) the discount amount that is charged
 (d) the discount rate that is charged
(e) the simple interest rate that is equivalent to the discount rate.
(15 June 2019, 15 October 2019, RM31.25, 5%, 5.04%)

11. A 10%, 100-day note is dated 20 September 2019. The maturity value of the note is
RM3,083.33. If the note is discounted on 17 November 2019 at 12%, find
(a) the maturity date of the note
(b) the face value
(c) the proceeds when the note is discounted
(d) the simple interest rate that is equivalent to the discount rate.
(29 December 2019, RM3,000, RM3,040.16, 12.17%)

12. Victor promised to pay a bank RM1,000 at the end of 120 days on a discounted loan. If the
bank charged him 7% interest in advance, find
(a) the discount
(b) the proceeds
(RM23.33, RM976.67)

13. David has a 120-day note for RM5,000 with interest at 6%. The maturity date of the note is 5
May 2019. On 23 April 2019, David discounts the note at 7%. Find
(a) the date of the note
(b) the maturity value of the note
(c) the discount
(d) the proceeds
(e) the simple interest rate that is equivalent to the discount rate.
(6 January 2019, RM5,100, RM11.90, RM5,088.10, 7.02%)