5 Mickey borrowed 11300 from Donald on Dec 4 2012 and agreed

5. Mickey borrowed $11,300 from Donald on Dec, 4, 2012 and agreed to pay Donald in 150 days at 6.45% interest. On Feb. 28, 2013, Donald sold the note to Minnie at a discount of 5%. How much did Minnie pay to Donald? How much does Mickey pay to Minnie?

Solution

minnie pays to donald :

11,300 -(11, 300 *5/100) = 10,735 (prinipal - 5 percent discount on the prinicipal )

mickey pays to minnie = Prinipal * rate *time /100

=>11,300 *6.45 *365/86 *365 *100 (converting rate into days)

=> 8.475 dollars