Step 3 The effective Interest rate can now be calculated using the following formula. Time will be a fraction whose numerator is the given amount of time in months and denominator is 12 months. Note that the effective interest rate from the formula will be expressed as a decimal value. effective interest rate = We determined the bank discount to be $127.50 and the proceeds to be $8,372.50. The discount note is valid for 3 months. Substitute these values to find the effective Interest rate as a decimal, rounding the result to three decimal places. bank discount proceeds x time effective interest rate = 8,372.50 x bank discount proceeds x time = 0.06091 127.50 3 12 The rate is currently a decimal value and needs to be expressed as a percent, so multiply by 100%. Thus, the effective interest rate (as a %) on a discount note of $8,500 for 3 months at a discount rate of 0.06%, to the nearest tenth of a percent, is %. Enter a number