Question
In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $15,000 and the interest
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In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $15,000 and the interest rate is 10%, the borrower pays .10 $15,000 = $1,500 immediately, thereby receiving net funds of $13,500 and repaying $15,000 in a year. What is the effective interest rate on this loan?
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Financial Markets And Institutions
Authors: Jeff Madura
13th Edition
0357130790, 978-0357130797
