Question

Ahmad received a 60 days, 10% interest bearing note which is dated on 3 April 2023. Then, 30 days before maturity date, he went to bank to discount the note with 4% interest rate and received RM2500. Determine:

a. the maturity date

b. the maturity value of the note

c. the bank discount

d. the face value of the note

Answer 1

a. The maturity date is 2 June 2023 (60 days after 3 April).

b. To find the maturity value of the note, we use the formula:
Maturity Value = Face Value + Face Value * Interest Rate * Time
Maturity Value = Face Value + Face Value * 10% * 60/360
Maturity Value = Face Value + Face Value * 1%
Maturity Value = Face Value + 0.01 * Face Value
Maturity Value = 1.01 * Face Value

c. The bank discount is the difference between the face value and the amount Ahmad received when he discounted the note:
Bank Discount = Face Value - Amount received
Bank Discount = Face Value - RM2500

d. We need to set up an equation to solve for the face value using the information given:
Face Value - Bank Discount = Amount received
Face Value - (Face Value - RM2500) = RM2500
Face Value - Face Value + RM2500 = RM2500
RM2500 = RM2500

Therefore, the face value of the note is RM2500.