Finance Loans Interest Rates
is the effective interest rate for a discount loan is greater than th stated reat of the intrest
On the discount loan, you pay the interest up front. In convential, you pay it over time. So if money has time value, then paying it up front is more expensive.
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Loan Amount: $15,000 Method of payment: discount basis Amount of Interest : $650 Term of loan: 1 year Effective Rate of Interest
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The correct answer is 4.8 :)
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Loan Amount: $15,000 Method of payment: discount basis Amount of Interest : $650 Term of loan: 1 year Effective Rate of Interest
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Interest = principal * rate * time 650 = 15,000 * r * 1 650 = 15,000r 650/15,000 = r 0.04333 = 4.3%
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To calculate the effective interest rate of a simple discount note, you need to use the following
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Option 1: P = Po + Po*r*t. P = 12,000 + 12,000*(0.08/12)*9 = 12,000 + 720 = $12,720. I = $720.
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Loan proceeds: <i>Net amount disbursed by a lender to a borrower, under the terms of a loan
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To determine the discount D and the proceeds P for a loan, we need to calculate the interest charged
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D. The discount rate is the interest rate at which the Federal Reserve charges to financial
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To find the actual rate, you can use the formula provided: (1 + x/12)^12 = 1.0201 Here's how to use
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