Question

Loan Amount: $13,000
Method of payment: discount basis
Amount of Interest: $625
Term of loan: 1 year

Effective Rate of Interest (to the nearest tenth) = _____.

Answer 1

@tkhunny

Answer 2

These are often done incorrectly. I'll show you one for free.

Simple Discount is to extract the Loan Interest from the Beginning of the loan period.

625 / 13000 = 4.8076923% Simple Discount Rate

13000 - 625 = 12375 = Cash in Your Pocket at Loan Inception

625 / 12375 = 5.0505051% Equivalent Simple Interest Rate

Your turn. You do one.

Answer 3

thanks

Answer 4

I'm looking for your work...