I need to calculate the effective interest rate of a simple discount note $21,750 at an ordinary bank discount rate of 7.91% for 120 days find the effective rate

To calculate the effective interest rate of a simple discount note, you need to use the following formula:

Effective Interest Rate = (Discount / Face Value) * (360 / Number of Days)

Where:
- Discount refers to the difference between the face value and the amount received.
- Face Value refers to the amount stated on the note.
- Number of Days refers to the time period for which the note is discounted.

In this case, the face value of the note is $21,750 and the ordinary bank discount rate is 7.91% for 120 days. To find the discount, we can use the formula:

Discount = Face Value * (Discount Rate / 100) * (Number of Days / 360)

Calculating the discount:

Discount = $21,750 * (7.91 / 100) * (120 / 360)
= $410.2638888888889

Now, substituting the values into the effective interest rate formula:

Effective Interest Rate = ($410.2638888888889 / $21,750) * (360 / 120)
= 0.0188888888888889 * 3
= 0.05666666666666667

To express it as a percentage, multiply by 100:

Effective Interest Rate = 0.05666666666666667 * 100
= 5.66666666666667%

So, the effective interest rate of the simple discount note is approximately 5.67%.