The Amount the Bank Charges When It Discounts a Note

question 10

Multiple Choice

The amount the bank charges when it discounts a note is calculated as:

• A) bank discount = note principal × bank discount rate × (discount period /360 days).
• B) bank discount = maturity value × bank discount rate × (original note period /360 days).
• C) bank discount = maturity value × bank discount rate + original interest rate × (discount period /360 days).
• D) bank discount = maturity value × bank discount rate × (discount period /360 days).

Assess the financial implications of discontinuing a product or department.

Apply the concept of contribution margin in decision-making.

Understand the importance of fixed and variable costs in profit planning.

Apply decision rules for further processing decisions.