Question

On January 26, Nyree Co. borrowed cash from Conrad Bank by issuing a 45-day note with a face amount of $225,000. Assume a 360-day year. a. Determine the proceeds of the note, assuming the note carries an interest rate of 8%.

Answer 1

The proceeds of the note, assuming the note carries an interest rate of 8% will be equal to the face value which is $225,000.

The face value is also referred to as the nominal value. It's the value of a currency. It's simply the nominal value of a security.

Based on the information given, Nyree Co. borrowed cash from Conrad Bank by issuing a 45-day note with a face amount of $225,000. Therefore, the proceeds of the note will be equal to the face value which is $225,000.

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