This question illustrates what is known as discount interest. Imagine you

are discussing a loan with a somewhat unscrupulous lender. You want to borrow $$20,000$ for one year.

The interest rate is $14\mathrm{.}5$ percent. You and the lender agree that the interest on the loan will be

$\mathrm{.}145\backslash$times $$20,000=$ $$2,900.$ So the lender deducts this interest amount from the loan up front and

gives you $$17,100.$ In this case, we say that the discount is $$2,900.$ What$$s wrong here?