This question illustrates what is known as discount interest. Imagine you are discussing a loan with a somewhat unscrupulous lender. You want to borrow $35,000 for one year. be 14 * $35,000 = $4,900. So the lender deducts this interest amount from the loan up front and gives you $30,100. In this case, we say that the discount is $4,900. es your answer as a percent rounded to 2 decimal places, e.g. 32.16.) Effective annual rate