ABC company draws a promissory note with a face value of $ 100,000. It is issued on 1st July and matures on 31st July
a) What is the interest rate if drawer receives $99,023?
b) How much is obtained by drawer if the interest rate is 12% p.a.?
See the attached file.
Cost of promissory note finance
Promissory note is a short term financial instrument whereby the borrower ( drawer) promises to repay the face value, at maturity to the holder. The cost of promissory note can be computed in the following manner:
1) The amount of interest will be equal to the maturity or face value( V) minus ...
The solution discusses the approach to compute the cost of promissory note.