On july 1, year 1, kay corp. sold equipment to mando co. for $100,000. kay accepted a 10% note receivable for the entire sales price. this note is payable in two equal installments of $50,000 plus accrued interest on december 31, year 1 and year 2. on july 1, year 2, kay discounted the note at a bank at an interest rate of 12%. kay's proceeds from the discounted note were: a. $48,400.b. $49,350.c. $50,350.d. $51,700.

(D) $ 51,700

Explanation:

Given;

The amount for the first year = $ 50,000

The interest for the first year = 10%

thus,

the amount of interest paid = 0.1 × $ 50,000 = $ 5,000

Thus,

The amount received by the bank at the end of the first year will be

= $ 50000 + $ 5,000

= $ 55,000

Now,

for the second year, discounted rate = 12% per year

for up to July 1 = 6 months = discount rate = 12% × (6/12)

thus, total discount fee = $ 55,000 ×  12% × (6/12) = $ 3,300

Therefore,

Kay's proceeds from the discounted note were = $ 55,000 - $ 3,300

or

= $ 51,700

Hence, option (D) is the correct answer

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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