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Rediscounted note

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Marbury 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, Marbury Bank rediscounted the note at LaPlata Bank at 11%. Discuss how to calculate how much Marbury Bank loaned to the maker of the note and how must Marbury would receive when the note was rediscounted.

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Solution Summary

This provides an example of calculating a note that has been rediscounted.

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First of all, the note is a simple discount note, that means when Marbury Bank loaned to the maker of the note, Marbury Bank discounted the note by 12%, here is the calculation:

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