Explore BrainMass

Allied Bank Bank Note

Allied Bank was the holder of a 3-month note dated June 18th with a discount rate of 12%. The face value was $10,000. On July 20th, Allied Bank rediscounted the note at Trusted Bank at 11%. Discuss how to calculate how much Allied Bank loaned to the maker of the note and how much Allied would receive when the note was rediscounted.

Solution Preview

For this note:
FV = 10000
N = 3/12 = 0.25
Rate = I/Y = 12% = 3%
Then by a financial calculator, we can compute ...

Solution Summary

Computations provided for you.