Problem 8-25 Bank loan to take cash discount (LO8-1, 8-2] Harper Engine Company needs $647,000 to take a cash discount of 2.50/15, net 120. A banker will loan the money for 105 days at an interest cost of $12,500. a. What is the effective rate on the bank loan? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Effective rate of interest 15.83% b. How much would it cost (in percentage terms) if Harper did not take the cash discount but paid the bill in 120 days instead of 15 days? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Cost of not taking a cash discount Prev Next > Check my work