Bank Discount
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Last updated 10:02 PM on 12/12/22
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11 Terms
1
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Bank Discount Formula
D = FV \* d \* t
Similar to I = PV \* r \* t
Similar to I = PV \* r \* t
2
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Bank Discount PV given FV and D
PV = FV - D
Similar to PV + I = FV
Similar to PV + I = FV
3
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Bank Discount PV Given FV, d, and t
PV = FV(1 * d(t))
4
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Bank Discount Future Value
FV = PV/ (1 - (d * t))
5
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d
Discount Rate
6
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D
Bank Discount
7
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d Formula
d = D/FV * t
8
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Find Interest Rate From Discount Rate
r= d/(1-(d*t))
9
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Find Discount Rate From Interest Rate
d= r/(1 + r(t))
10
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Bank Discount Notes To 3rd Parties Steps
1. Step 1 - Find Maturity Value (FV) using Simple Interest
1. FV= PV(1 + r(t))
2. Step 2 - Find x using bank discount
1. x = FV(1-d(t))
11
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Compound Interest & Selling to 3rd Parties Steps w/ Bank Discount
1. Step 1 - Find the Maturity Value (FV)
1. FV= PV(1 + I/yr / P/yr)
2. Step 2 - Find X Using Bank Discount
1. x= FV(1- (d \* t))