Sign Delaware Banking Promissory Note Template Fast

Industry sign banking delaware promissory note template fast

okay in this video we're going to look at what is promissory note okay note that before this we already learned about simple interest so here in promissory note we will apply some basic concept in simple interest okay now let's look at some introduction what is promisory node okay usually companies borrow money from banks for working capital business expansion or asset acquisition okay besides that they also can issue shares long-term debt so normally long-term debts we call it as bonds or short-term debts which is promisingly not to raise money okay normally promissory notes or notes in short are usually deaf instruments so it is adept instruments and are issued on short-term basis okay it is a negotiable instrument wherein one party which is the maker or the issuer makes an unconditional promise in writing okay in writing to pay a determined sum of money to the other which is the payee at a future date or on demand a promissory note also can be interest bearing nodes interest bearing node means that interest will be charged on that promising arena okay and non-bearing interest notes non-bearing interest not means that there is no interest okay it means that interest equal to 0 so remember when interest equal to zero percent how much we borrow equivalent to how much we should pay okay for an interest bearing note the rate is stated on the note usually at simple interest rate okay again the rate stated on the promisory node using simple interest rate so that's why as i said before under promisory node we still will apply concept of simple interest rate okay which is based on original principle that is borrowed okay this is a simple example of permissory note where you write your promise in order to pay some amount of money to the other party okay example here we have rm 3500 the date here second september 2019 so this note was made in sha alarm for example here fair for the value received promised and agrees to pay in 120 days to the order of adam in lawful money of malaysian principle sum of three thousand five hundred sunday in addition to the principal some principally referring to this 3500 linga borrower borrow in this case is sophia okay sophia need to pay to adam also agrees to pay interest at the rate of three percent per annum commencing on the date here off so here we look at here due of the [Music] deal of this note is on 31st december okay 2019 in this promissory note there are some features or characteristics of promised arena that you need to know okay example here so 3500 this one we call it as principal okay or the other term for promising not we call it as face value okay so remember face value also equivalent to principle okay this note was made or was signed on 2nd september 2019 so 2nd september 2019 here we call it as date of not okay this one of not 3500 just now we call it as principal or also we can call it a space value okay so face value is value p so far for the value received so it means that sofia will receive the money so sofia is the borrower and item here is the lender okay so sophia needs to pay some amount at the end of certain period which is 31st december here to adam okay adam lend some money to sophia fear borrows money from adam okay so 3500 only this one referring to principle of face value okay here interest rate of three percent so this is value r okay so remember in from misery note we use simple interest rate rate of simple interest okay due 31st december 2019 so 2nd september just now we call it as date of note so 31st december here we call it it as maturity day okay means that day you need to pay or in discuss the date sophia need to pay this amount the principal together with the interest okay so now let's look at from this promissory note how much in total sofia needs to pay to adam okay since from misery note we use concept simple interest so how much we need to pay the value as simple amount s equal to p one plus r t so s equal to p which is three thousand five hundred multiply one plus rate is three percent so 0.03 times t okay okay time period for this promissory note here is 120 days okay so if you calculate 2nd september to 31st december 2009 sorry 2019 here will be equivalent to 120 days so 120 days here this one we call it as term of the note okay so which is value t okay note that for topic promissory note and bank discount so bank discount after this topic so remember from missouri note and bank discount we apply bankers rule okay promissory note and bank discount we apply banker's rule so again what is banker's rule so banker's rule we use ordinary simple interest and exact time so exact time is the following number of days in that particular month and ordinary simple interest t is divided by 360. okay so don't get confused with previous simple interest topic so remember when you answer question promissory note and then discount make sure you apply banker's rule okay from misery node and bank discount apply bank control so in this case how much amount that sofia needs to pay to adam when you add 30 here will be 120 so since this is under promissory note apply bankruptcy so t is divided by 360. so when we calculate this one we will get s equal to three five three five okay three thousand five hundred thirty-five finger so if you want to calculate amount of interest that adam charge sophia is s minus b three five three five minus three thousand five hundred is our m thirty five finger okay if question asks you how much interest or amount of interest so here 3535 value as we call it it as maturity value okay the same concept as simple amount but under promissory note we call it as maturity value i 35 ringgit is still we call it as interest okay so that are some characteristics of features under from misery note that you need to know principle of face value date of not and then we have maturity date so once we have face value the value s here we call it as maturity value so number of this year we call it as term of not okay then we have borrower lender and also simple interest rate okay so remember from misery and bank discount we apply banker's rule [Music] okay these are the main features that i already explained before so maker or the borrower normally maker or borrower will make the no sign the note so maker or borrower or we also call it as promiser or obligate is the sign sorry it's the person that signs the note okay payee or the lender who give the money okay so the payee or the lender or the promisee or obligee is the person to whom the payment is to be made then date of not against which the node is signed and issued term of the node term of the node means that length of times until the maturity value is due face value which is value p okay amount stated on the node okay then we have maturity value which is value s so how to calculate s we still use uh formula simple amount here so if there is no interest so value s will be equivalent to value p okay then we have maturity date okay maturity days of the note is the date on which the maturity value is the or when you need to pay the borrowed amount let's wonder interest rate so interest rate we use simple interest rate okay now let's look at this example simple example as well okay based on this promissory note identify who is the payee of the note who is the maker of the note and calculate the maturity value of the note okay if you look at here the principle 5000 date of note 15 march maturity date 1st september now we have delisha for the value received promises and agrees to pay in 170 days to the order of your dolls in lawful money of malaysian principle sum of 5 000 only in addition to the principle some borobo also agrees to pay interest at the rate of 2.5 per annum commencing on the date here of okay so based on this promissory note identify who is the payee okay pay is the lender who give the money to the borrower so here payee will be filled out and then who is the maker of the note the person who borrowed the money so in this case the maker or the issuer or the borrower is dilution okay calculate the maturity value of the null say if derelicia borrowed 5000 ringgit with rate of 2.5 percent per annum 470 days so on first september how much dilution needs to pay to fill downs so here we calculate value as s equal to p one plus r t so p five thousand ringgit multiplied by one plus ray is two point five percent so zero point zero two five so be careful with uh rate or percentage here zero point zero two five okay t term of node is hundred seventy days okay so remember promising not in bank discount we apply banker's rule so banker's rule we use ordinary simple interest where t the time period need to divide by 360. so here s equivalent to 5059.03 so how much interest delisha needs to pay to fill down so again interest equal to s minus p so she needs to pay for 5059.03 minus p which is 5 000 so amount of interest is 59 ringgit 3 cents okay so this is just additional question if christian asks you how much interest it need to be paid okay now let's look at this example the maturity value of a hundred day interest bearing from misery node is six hundred ringgit the maturity value is 600 ringgit okay so 600 ringgit here is value s okay if the interest rate per annum is 4.9 calculate the face value so here we want to find value p so we know that s equal to six hundred hundred day here is t hundred t must be in here so promisory note we apply banker's rule divided by 360. and then rate of interest is 4.9 percent so 0.049 okay calculate the face value value p so we know that p equivalent to s divided by 1 plus r t okay so this one p comes from formula simple amount okay s equal to p 1 plus r t so you make p as the subject so p equal to 600 divided by 1 plus r t is 100 divided by 360. so here p will be equivalent to nine one point nine four so remember when we calculate value p okay if there is an interest charge so value p must be less than value s okay or the other way we can say that s must be more or greater than value p okay now let's look at question two the interest on a 55 day promissory note is 79 ringgit the interest is 79 ringgit so 179 ringgit is value high amount of interest if the interest rate is 6.5 percent per annum find the face value of the note so again we want to find value p so t here is 55 days if days change to year divided by 360 since we use promissory note where we need to apply banker's rule r rate 0.065 okay now find the face value value p okay which formula to use okay can we use this formula s equal to p1 plus rt okay so the answer is cannot okay why because we don't have info about maturity value or value s but now we have info about interest okay so we can find value p by using formula i equals to prt okay we want to find value p here you can substitute the value or if you manipulate this formula you make t as the subject p equivalent to i divided by r t okay multiply go to this side you move to the other side become divide so p equal to interest 79 ringgit divided by r 0.065 t is 55 days divided by 360. so here when we calculate this part p will be equivalent to [Music] 7955.24 okay so again which formula we we need to use look at the info given from the question okay then you relate what are the formulas that you already learned okay now let's look at example three a promissory note day 31st july 2019 reads five months from the date i promise to pay 1800 with interest at eight point eight percent per annum define the maturity date of the note okay so the net was made on 31st july so if the term of the note is five months so when is the maturity date so in this case you just do like this 31st july 2019 just plus five months okay no need to calculate profits for each mine okay if given like this five months okay but if two dates were given in the question that you calculate exact number of days so here the date will be so july after july will be august and then september october november and the fifth month will be december one two three four five okay five months so the maturity date will be on 31st december 2019 okay just look like that okay b find the maturity value of the nurse that means that we want to find value s so s equal to p 1 plus r of t s equal to p is 1 800. so i promise to pay 800 so meaning to say that here is face value with interest at 8.8 percent per annum so 1500 here excluding interest okay because here it stated that with interest at 8.8 percent per annum so one thousand eight hundred here is phase value okay plus one plus r which is eight point eight percent zero point zero eight eight okay t just now five months so five months again t must be in years so if you divide by 12 okay if given number of this like previous example so divide by 360 apply banker's rule but in this case it give us 5 months if months convert to year divided by 12 okay don't divide by 360. 360 if we have number of days so in this case period given is already in months so months divided by 12 in order to change it to here okay so if we calculate this one as we will get our m 1 8 6 6 okay so let's say if there is another question here amount of interest if amount of interest i equal to s minus b so if amount your answer must be in r m so p is 1 800. so interest is rm 16gb if christian asked to find the rate of interest if rate your answer must be in percentage if amount of interest amount must be in rm okay now let's look at new topic here bank discount so what is bank discount it is an interest on annual basis deducted in advance okay deducted in advance or deducted earlier on alone the net amount received by the borrower is called the prostate okay so now we have new terminal proceeds okay now look at example in order to understand better error borrow 3000 ringgit for a year for one year from bella who charges nine percent discount rate okay now you have another newtonian discount rate okay before this we have simple interest rate okay under bank discount we have discount rate okay then bella will take 270 so how we get 270 this one is how we calculate interest i equals to prt three thousand multiplied by nine percent multiplied by t which is one year okay as interest so actually 270 is the interest in advance and she will receive 2730 submiss that principle just now 3 000 minus the interest okay which is 270 as the proceed so 2730 we call it as the proceeds what is proceed is now net amount received okay so it must be note that ira will have to pay 3 000 at the end of one year okay later on i will spend more with this figure so this is the concept of bank discount okay so interest is deducted in advance or interest is deducted earlier okay it is different if bailout charges a nine percent simple interest rate okay so here is concept bank discount so here concept if we use simple interest so in such a case ira who borrows 3000 before has to pay back 3270 so what is 3270 the original principal plus the interest at the end of one year so the difference between simple interest and bank discount is okay now let's look at value that i put in box here okay first you must remember what is different between bank discount and simple interest bank discount just now interest deducted earlier earlier okay in simple interest we can say that interest will be pay will be paid at the end of certain period okay so that is the difference between simple interest and bank discount okay now let's look at under simple interest first okay just now ira borrow 3000 the principal for one year and with interest rate of nine percent okay so how we calculate interest so i here equals to p r t so when we calculate this one we get interest of 270 okay so after one year iron needs to pay back more than 3 000 why more than 3 000 because of interest of 270 here so amount has to pay back after one year okay after one year is 3270 okay so that is simple interest we pay more than what we borrow okay okay now let's look at bank discount so remember bank discount interest deducted earlier okay we take the same figures here so p also 3 000 for one year okay d just now is bank discount rate okay so under bankruptcy also we have rate but we call it as bank discount rate the concept still the same with simple interest rate okay so we use symbol d or letter d here okay now what is d here d here capital d here we call it as bang this count okay what is ban discount it is actually what we said just now interest is deducted in advance okay so if you look at here i equals to prt okay so here d so what is d d equal to s d t okay now let's look at compare with i equals to p r t okay concept of bank discount interest is deducted earlier so if interest is deducted earlier if we borrow 3 000 so meaning to say that we also pay to the lender three thousand okay if we borrow three thousand we also pay to the lender three thousand why we pay three thousand as well because interest is deducted earlier okay so that's why here under bank discount how much we borrow which is p also equivalent to how much we need to pay back okay so that's what i put here s equal to p okay so remember under bank discount we have value as okay value s is actually how much that we borrow okay so that one is for bank discount only so here if you compare formula d and i it is the same concept actually so d we call it as bank discount okay so p [Music] now we change to s why we change to s because under bank discount how much we borrow also equivalent to how much we pay back okay because interest was deducted earlier so r is rate of simple interest so in bank discount we change it with bank discount rate okay or discount rate which is also equivalent to rate per year okay now this under simple interest is term of borrowing period or term of investment so now t here also must be near but here we call it as term of discount so after this i explain more about t inver in formula d here okay so since interest is deducted earlier how much the interest which is 270 okay so in this case interest we are referring to bank discount here so since we borrowed 3 000 okay if under bank discount so we borrowed 3 000 so we must deduct interest earlier okay so deduct 270 so 3000 minus 270 we just get 2730 so this is the amount that we get after the interest or the bank discount was deducted so this amount we call it as pro 6 okay so i we explain with another example okay let's say under bank discount okay let's say i borrow from bank using bank discount for five thousand so remember in bank discount how much we borrow also equivalent to how much we pay back okay because why because interest was deducted earlier so 5 000 here we put it as value as okay not value p with discount rate for example discount rate is two percent and my discount term is for two years for example okay i borrow five thousand but if using bank discount i will not get five thousand okay why i will not get 5000 because in bank discount the concept says that the interest must be deducted earlier okay so interest here we call it as bank discount so in this example how much is the bank discount so bank discount is d okay so d equal to s d t s 5000 t is already two percent and t is two years so if we calculate this one we will get five thousand multiply by 2 percent multiply by 2. so 200 ringgit okay this is the amount of interest that need to be deducted okay so how much that you will get okay so just now you borrow five thousand so you will not get five thousand if the bank offers you bank discount okay so how much you will get so you borrow five so minus this one okay because this one need to deduct a layer so minus 200 so this one will be equal to rm 4800 ringgit so 4800 ringgit we call it as prostate okay prostate okay so that's why in bank discount how much we borrow also equivalent to how much we need to pay back okay so if we borrow 5000 actually we also pay 5 000 because why because the interest or bank discount here was deducted earlier okay so meaning to say that if bank offer your bank discount okay so the interest will be deducted earlier okay so if you borrow 5000 you will not get 5 000 okay you will get less than 5000 why less because interest must be deducted earlier okay let's say you are in need of money now you won 5 000. if bank offer you bank discount not simple interest rate okay you need to ask for more than five thousand okay if you need five thousand but then give you bank discount later on you will get less so if you still want five thousand in hand okay using bank discount you need to ask for more than 5 000 because the interest must be deducted earlier okay if the bank offer you simple interest okay if you borrow five thousand later on you need to pay back more than five thousand okay so how much you need to pay back you need to pay back for five thousand two hundred okay so this one is the interest if using simple interest we pay interest later okay so you need to pay back for 5200 ringgit but if using bank discount you will get less than what you ask okay but you still pay for five thousand so if you look at formula here bank discount d d equal to s dt so d is bank discount or similar to concept interest i equals to prt so s here we call it as amount of maturity value d discount rate and t the term of discount and also must be in years so again if given in months so months t divided by 12 and if given a number of days 30 divided by 360. ky 360. so previously i already explained that for topic promissory note and bank discount we apply banker school okay so bankruptcy we use exact time and ordinary simple interest ordinary simple interest is where t is divided by 360. okay so i hope you can differentiate between simple interest and bank discount okay now let's look at formula for proceeds okay so we know that process is the net amount we receive after the interest or the bank discount was deducted okay so process is equal to maturity value which is value s minus bank discount discount is value d okay so d here is as dt so d equal to s dt so when we factorize as here okay so the formula for process so i just simply write it as pr pr means process so first equal to s multiplied by 1 minus dt s times 1 s minus s times dt then we get s dt okay so c is equal to s minus the castle when you expand this part you can write it as for c equal to s multiply by y minus d okay now let's look at this example russia borrows 9 000 for four months from a lender who charges a discount rate of five percent okay now how to differentiate 10 is using simple interest or bank discount okay so for example here is stated that discount rate say discount rate meaning to say that we apply bank discount okay so don't use simple interest okay let's try the information given so we know that in bank discount how much we borrow also equivalent to how much we need to pay so in bank discount how much we borrow we let it equal to x okay the maturity value because at the end of four months in this example you also pay nine thousand not more than five thousand so here s equal to nine thousand okay how much we borrow also equal to how much we pay okay so we write it as s instead of p so in bank discount don't write how much we borrow equivalent to p okay you write it as value as maturity value because that is the amount that we pay okay for four months okay that is the discount terms t equal to four so gain t must be in year so convert two year months convert to you divide by twelve okay from a lender which are just a discount rate of five percent so discount rate d okay so if simple interest rate r discount rate b five percent okay find the amount of bank discount amount of bank discount which is amount that need to be deducted earlier so d equal to s dt so substitute the values discount rate five percent and t is 4 over 10 so if we calculate this one the amount of bank discount we will get 150 ringgit okay okay b process okay what is proceed just now proceed is the net amount received after the interest was deducted the interest here now referring to bank discount okay so the concept is still the same we call it as bank discount so process is the net amount received so prostate is now equal to s minus d so no need to expand this formula since we have value s and also value d okay so yes just now says russia wants to borrow 9 000 okay so since this is bank discount so consent bank discount the interest must be deducted first okay so the interest the interest is now again referring to bank discount here okay so borrow 9000 okay using bank discount so minus the bank discount amount which is 150. so how much is do russia will receive okay order proceeds so 9 000 minus 150 equivalent to eight thousand eight hundred fifty okay so in this case if you can see so russia borrows nine thousand she only received less than nine thousand which is only eight thousand eight hundred fifty okay one less than nine thousand amount that she asked for because concept bank discount interest must be deducted earlier okay so again the interest we call it as bank discount okay so among receive here we call it as proceeds so in this topic when you calculate those values value as must be more than value process okay or we can say that process when every time you calculate proceed value proceed must be less than value s okay now let's look at number two here parents need 10 000 now okay so how much should he borrow from his bank for two years nine months at a 7.5 percent discount rate okay so again discount rate bank discount rate so meaning to say that this question using bank discount okay so it does not mention about simple interest rates so meaning that not using simple interest okay so be careful bank discount rate mr use bank discount okay let's write the info given okay let's say i expect t first two years nine months okay two years t must be in here so two years plus nine months nine months so months change two year divided by twelve so nine over twelve equal to zero point seven five so zero point seven five plus two equal to 2.75 discount rate be equal to 0.075 so what is 10 000 here okay what is 10 000. so harris needs ten thousand now okay so since this is question bank discount so remember that when we borrow money from bank using bank discount okay so the interest must be deducted earlier okay so let's say if you borrow 1000 you will not get 1000 you will get less than 1 000. why because the interest was deducted earlier so in this case harris need 10 000 okay so if using bank discount how much should he borrow then after the deduction of interest he will get 10 000 okay the amount that he received which is 10 000 will be the prostate okay so remember as i said before if then offer your bank discount and you want for example you want ten thousand in hand you need to ask more than ten thousand okay why us more than ten thousand because using bank discount the interest will be deducted first okay that interest we call it as bank discount amount so here 10 000 is value proceeds so how much should he borrow so remember i said this now how much we should borrow in bank discount is how much also equivalent to how much we need to pay right so here is actually value s so which formula we need to use okay so just now first formula under bank discount we have s equal to sorry d equal to s d t second formula is formula process which is equal to s minus d okay so if we expand this formula you can write process equal to s multiplied by 1 minus dt okay now we want to find value s is equal to what how much he should borrow okay so look at which formula so we cannot use this formula because we don't have bank discount amount here okay so similarly we cannot use this formula because we don't have value d here okay now look at sila's formula so we have prostate we want to find s we have d and we have value t okay so in this case we use third formula so process is equal to s times 1 minus dt so we know that process is equal to 10 000 okay substitute the value so we want to find value s which is referring to amount that he should borrow multiply by one minus d d 0.075 okay t is 2.75 okay t must be in here so this one already in year so if question give you a number of this remember t is divided by 360. okay from israel and bank discount we apply bank cash rule so here 10 000 equal to s okay calculate value in bracket here so 1 minus dtd multiplied by t 0.075 multiplied by 2.75 equal to okay if you want to write in fraction no problem or in decimal point also no problem for example here is up to five decimal point okay still reasonable for you to write okay if let's say you get long decimal point if you want to use using fractional problem or if you want to round off to four decimal point also no problem but later your answer will be slightly different okay so 0.79375 so s equal to so multiply go to the other side become divide so 10 000 divided by 0.7937 okay so when you calculate value as okay so the answer must be more than 5000 okay so 10 000 divided by answer answer referring to 0.79375 previous answer in your calculator so 1 2 5 9 8.43 our m 1 two five nine eight point four three okay one two five nine eight point four three okay so here if let's say bang offer your bank discount and you want ten thousand in hand okay so how much you should borrow 12 500 90 800 and 43 cents okay you must ask more than 10 000 because why because the interest or the bank discount will be deducted first okay if you ask 10 000 later on you will not get 10 000 and you will get less than 10 000 okay so that's why you need to ask more than 10 000 if you want 10 000 in hand so once you have value s here we can calculate value bank discount right so what is the amount of bank discount so if you look at this formula process equal to s minus d okay now we want to find value d 10 000 as 12 598 ringgit 437 minus d okay now make d is the subject so 10 000. minus twelve thousand five hundred ninety eight ringgit forty three seven equal to negative d so here will be negative two thousand 598 ringgit 4310 equal to negatively okay so negative negative 70 is our m 2 5 9 8.43 this is a additional question okay if christian asks you what is the amount of bank discount okay so if you want ten thousand in hand you must borrow twelve thousand five hundred ninety eight we get 43 okay so that the interest that should be deducted earlier which is 25884 then you will get 10 000. okay so if you want 10 000 but you also borrow ten thousand later on you will get less than ten thousand okay so that's why you have ten thousand is value prospects okay now let's look at simple interest rate equivalent to bank discount rate okay what is simple interest rate value r okay equivalent means that equal to bank discount rate which is value d okay so now what is simple interest rate equivalent to bank discount rate let's look at the definition here so the two rates are percent and the percent are equivalent if the two rates yield the same present value for an amount due in picture okay meaning to say that let's see if we use simple interest okay the rate given is for example three percent and if we use bank discount the rate given is for example four percent okay so now we have two different rates okay but this two different rate will give us the same amount of p or present value that should be due in future okay so that is mean by simple interest rate equivalent to bank discount rate okay two different rates but later on we will give you the same amount of principal or principal or present value that will due in future okay so that is my simple interest rate equivalent to bank discount rate okay now look at here the simple interest rate the equivalent to discount rate is given by equal to d divided by 1 minus dt okay so simple interest rate is r okay equivalent to discount rate discount rate is d okay let's say in this case you took a loan and bank offered you bank discount okay so let's say you want to borrow 1000 so remember in bank discount how much we borrow equivalent to how much we need to pay back okay which is also equivalent to our present value okay so let's say you want to borrow 1000 so now case of bank discount okay we borrow 1000 and then the rate given for example is three percent okay so now we want to find the simple interest rate here value r which is equivalent to discount rate equivalent means that value are here will be different but equivalent referring to it will give us the same value of present value means that value p here okay or value as in bank discount okay so we want to find how many percent in simple interest that will give the same amount of present value here okay so that is simple interest rate equivalent to bank discovery okay d here is discount rate and t as usual is the term of discount okay so if given in months convert to year divided by 12 and if given number of days this divided by 360. okay so promisory note and bank discount use banker's rule okay if bank offered you using simple interest okay so we want to find the discount rate that is equivalent to simple interest rate r so how to find the discount rate so d equal to r divided by 1 plus rt where r is the simple interest rate and t the time period okay let's say in this case p principle or present value is 1000 and r is for example 2.8 percent okay so this is case of simple entrance okay so we have two different rates here so first we have bank discount rate d equal to three percent and second one is simple interest rate two point eight percent okay so we have two different rates but will give us the same amount of present value okay so that is what we want to find here simple interest rate equivalent to bank discount rate okay so for question asking about this one the keyword here you can refer this one okay equivalent okay now let's look at example a bank discount note is due in four months using bank discount rate nine point five percent bank discount rate so that is value d okay 0.095 find the simple interest rate that is equivalent okay so this is the keyword equivalent to the bank discount rate charged by the bank okay so here t is for months months convert to you divide it by 12 okay so now we want to find simple interest rate find simple interest rates the simple interest rate is value r okay so we know that simple interest rate that is equivalent to bank discount rate is given by d divided by one minus dt okay so substitute the value d 0.095 divided by 1 minus 0.095 times t 4 divided by okay calculate this one how many percent okay calculate denominator first one minus 0.095 multiplied by 4 over 12 so if multiplication and division you can do directly okay so equal to so this is denominator and then 0.095 divided by answer answer referring to value of denominators so change to decimal so the value is 0.0981 okay so use for decimal point if you get long decimal point like this round off to four decimal point so 0.0981 so normally we express in percentage then multiply by hundred so r is nine point eight one percent okay so that is simple interest rate that is equivalent to bank discount rate okay we have two different rates here so if bank discount nine point five percent but if in simple interest nine point eight one percent okay so two different rates here you give the same amount of present value so d 9.5 percent but if you use simple interest the rate will be 9.81 so these two different rate will give the same amount of present value okay so that is mean by simple interest rate equivalent to bank discount rate same amount okay same amount of present value okay now number two find the bank discount rate so bank discount rate is value d so you want to find value d that is equivalent again so this is the keyword equivalent to 10 per annum simple interest rate for a 90 day night okay so now given to us is rate of simple interest 10 percent okay and the time period here is 90 day day convert to year divided by 360 use banker's rule for bank discount and promising so we know that bank discount rate d that is equivalent to simple interest rate here is given by r divided by 1 plus r t okay substitute the value r 0.1 divided by 1 plus 0.1 multiplied by 90 over 360. so d how many percent so i calculate denominator first one plus 0.1 multiplied by 90 divided by 360. so this is denominator so 0.1 divided by dominator so here you press answer so zero point zero nine seven six so run off up to four decimal point zero point zero nine seven six zero point zero nine seven six so again normally we rate we express in percentage multiply it by hundred so nine point seven six percent okay so now we have simple interest rate of ten percent and discount rate of 9.76 okay so these two different rate will give the same amount of present value okay so that is mean by bank discount rate equivalent to simple interest rate two different rates give us the same amount of present value okay now let's look at this example the interest on a three-month promissory note date 20th june 2018 was 120. if the interest rate was 12 per annum find the maturity date of the night so here 120 is value interest okay the interest was 120 okay so i here equal to 120 so what else we have here interest rate 12 so r equal to 0.12 time period 3 months months divided by 12 in order to convert to year okay find the maturity date so we know that date of the node is on 20th june okay so if three months plus three months so if three months will be june and then july august and then take month is september okay july august september so we'll be on 20th september 2018 yes so if there is no two dates given just show you're working like this okay we find the face value first value is value p okay so now we have info about i so we can use formula i i equals to p r t so i 120 so you want to find p weight 0.12 and t is 0.12 multiplied by 3 divided by 12 so 3 over 100 to your hundred is 0.03 so p equal to 120 divided by 0.02 the face value here is 120 divided by 3 percent is 4 000 ringgit okay next number four the face value of a four-month promissory note day 31st october 2018 was 500 ringgit okay the face value was 500 ringgit so p is 500 ringgit if the interest rate was eight percent per annum are 0.0 0.08 and this num t is 4 months okay find the maturity date of the note so we know that date of the note is 31st october 2018 and the term given is 4 months plus 4 months okay so after october november december so here is 2018 so here will be 2019. january february okay one two three four so now february okay february look at 2019 2019 divided by 12 we will get sorry divided by 4 okay because we want to determine it here so we get 504.75 so if you get remainder here of 0.75 here meaning to say that 2019 is a leap year so if leap year we have 29 days okay so the date here will be 29 february 2019 okay then we find the maturity value so we know that maturity value is s so s equal to which formula since we have info about principle is equal to p one plus r t so principle 500 one plus r 0.0 a and t is for minus okay so if we calculate this one we will get 0.08 multiplied by 4 over 12 plus 1 multiplied by 500. 513 ringgit 33 cents okay so again value s must be more than value p okay so in this case amount of interest is 13 ringgit 33 cents okay so i equal to s minus b okay last one businessman received a promissory note date 15 may 2019 for 2 500 that was due in 70 days if the interest charge was 12 to determine the maturity of the night okay extract the info given first so amount that we receive our amount stated on promissory note is value p okay face value 2 500 face value or the principle okay so from misery note we use simple interest so rate here is 12 and the term is 70 days t equal to 70 days this convert to year divided by 360. okay for case of promisory node and bank discount only okay a find the maturity date of the net so from 15 may plus 70 days so when is the date okay so date of not me so we start with may may june july let's say i start until july so remember bank discount and from misery note we use bank control bankers rule using ordinary simple interest and exact time so here we need to use exact time okay so we know that may we have 31 days in may so starting day is 15 may so minus 15 so we have another 16 days left in may so total here must be equal to 70 days okay june we have 30 days july 31 day okay but if you look at here if you total up this one these are already more than 70 days okay we just won 70 days so how many days more in july so delete this first okay how many days more in july so 16 16 plus 30 is 46 right so total we won 70 days so 70 minus 46 this now so we need another 24 days in july so july another 24 days so if you total this one will be equivalent to 70 days so the date will be on 24 july 2019 25 july 2019 okay b maturity value of the null so maturity value is value s so s equal to b 1 plus r b so we know that face value is 2 500 multiplied by 1 plus r 12 plus 10 and t is 70 days so this converts to here divided by 360. so if we calculate this one we will get two five five eight point 8.33 okay let's see i add another question you can see here so this question use simple interest right okay let's say i put another question here find the discount rate okay that is [Music] equivalent to the simple interest rate given simple interest rate given okay so we know that discount rate is now d equal to okay equivalent okay so use formula rate equivalent d equal to r divided by 1 plus r t so we simple interest 12 divided by 1 plus 0.2 multiplied by 70 divided by 360. so this one if we calculate d will equal to 0.12 times 70 divided by 360 equal plus 1 and then 0.12 divided by answer so 0.1173 0.1173 uh if we express in percentage d is 11.733 okay so with simple interest rate r equal to 12 but if you were offered with bank discount the rate is only 11.73 percent okay even though these are two different rates okay but with these two different rates it will still give you the same amount of face value here okay so that is mean by discount rate that sorry discount rate that is equivalent to the simple interest rate okay two different rate that will give the same amount of face value