The following three one year discount loans are available to you Loan A $120,000 at a 7 percent discount rate Loan B $110,000 at a 6 percent discount rate Loan C $130,000 at a 6 5 percent discount rate a Determine the dollar amount of interest you would pay on each loan and indicate the amount of n...

a Loan A 120000 x 07 8400 120000 8400 111600 Loan B 110000 x 06 6600 11 ...

The following three one-year discount loans are available to you: Loan A: $120,000 at a 7 percent

Question:

The following three one-year “discount” loans are available to you:
Loan A: $120,000 at a 7 percent B: $110,000 at a 6 percent C: $130,000 at a 6.5 percent Determine the dollar amount of interest you would pay on each loan and indicate the amount of net proceeds each loan would provide. Which loan would provide you with the most upfront money when the loan takes place?
b. Calculate the percent interest rate or effective cost of each loan. Which one has the lowest cost?
Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...