What is effective rate of interest if loan is discounted

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Reference no: EM132005856

1. Kenneth's Arrows and Bows borrow $15,000 for one year at 8% interest. What is the effective rate of interest if the loan is discounted?

A. Less than 8.5%

B. More than 8.5% but less than 9.5%

C. More than 9.5% but less than 10.5%

D. More than 10.5%

2. John Doeber borrowed $150,000 to buy a house. His loan cost was 16% annually because of his bad credit score. He promised to repay the loan in 5 years on a quarterly basis.. How much are the quarterly payments?

A. $11,453

B. $45,811

C. $13,113

D. $11,038

Reference no: EM132005856

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