To calculate the bank discount and proceeds using the ordinary interest method for a 180-day note with a 6 1/4% discount rate and an amount due at maturity of $2,900, we can proceed as follows:

Formula for Bank Discount:

$\text{Bank Discount} = \text{Maturity Value} \times \text{Discount Rate} \times \frac{\text{Time}}{360}$

Formula for Proceeds:

$\text{Proceeds} = \text{Maturity Value} - \text{Bank Discount}$

Given Data:

• Maturity Value (Amount due at maturity) = $2,900
• Discount Rate = 6 1/4% = 6.25% = 0.0625
• Time (days) = 180

Step 1: Calculate the Bank Discount

$\text{Bank Discount} = 2,900 \times 0.0625 \times \frac{180}{360}$ $\text{Bank Discount} = 2,900 \times 0.0625 \times 0.5 = 2,900 \times 0.03125 = 90.625$ The bank discount is $90.63 (rounded to two decimal places).

Step 2: Calculate the Proceeds

$\text{Proceeds} = 2,900 - 90.63 = 2,809.37$ The proceeds are $2,809.37.

Final Answer:

• Bank Discount: $90.63
• Proceeds: $2,809.37

Would you like more details or have any further questions?

Here are 5 related questions to deepen understanding:

1. What happens if the note duration is changed to 90 days instead of 180 days?
2. How would the bank discount change with a higher interest rate, say 8%?
3. Can you calculate the proceeds for a note with a maturity value of $5,000 and the same discount rate?
4. How does the ordinary interest method differ from the exact interest method?
5. What impact does the time period (days) have on the bank discount?

Tip: In ordinary interest calculations, the year is assumed to have 360 days, which simplifies calculations but can lead to small differences compared to using the exact number of days in a year (365).