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2. The commercial rate of discount per annum is 18% (this means that simple discount is applied with a rate of 18%). (a) We borrow

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2. The commercial rate of discount per annum is 18% (this means that simple discount is applied with a rate of 18%). (a) We borrow a certain amount. The loan is settled by a payment of 1000 after three months. Compute the amount borrowed and the effective annual rate of discount. Answer: 955 at rate 16.82% (b) Now the loan is settled by a payment of 1000 after nine months. Answer the same question, Answer: 865 at rate 17.58%

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