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On January 1, Barona Company gave Cosell, Inc. a $15,000, 2-month, 6% note in payment of its...

Question:

On January 1, Barona Company gave Cosell, Inc. a $15,000, 2-month, 6% note in payment of its account. One month later, Cosell discounted the note at the bank at 8%. The amount of cash that Cosell received from the bank was approximately what?

Maturity Amount:

The final amount of the investment, deposits, loans, debts, etc which is receivable is known as the maturity amount. The maturity amount has the principal amount and interest. The maturity amount can also be lower than the principal amount in case of loss.

Answer and Explanation:

Maturity Amount = Face Value + Interest

Maturity Amount = $15,000 + 15000*6%*2/12

Maturity Amount = $15,150

Bank Discount = Maturity Amount x Bank...

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Principal Amount: Definition & Formula

from Financial Accounting: Help and Review

Chapter 9 / Lesson 2
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