A man makes a simple discount note with a face value of $2,200, a term of 140 days, and a 9% discount rate. Find the discount.

1 answer

Discount is calculated by the formula:

Discount
= Maturity value * discount rate * discount period.

Here I assume "face value" is what the bearer receives on maturity.

So discount
= 2200*0.09*140/365
= $75.95

You can read the following link for more details:
http://www.cliffsnotes.com/more-subjects/accounting/accounting-principles-i/receivables/discounting-notes-receivable