What is the implied rate on this loan

Reference no: EM13268495

In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $20,000 and the interest rate is 10%, the borrower "pays" 0.10 × $20,000 = $2,000 immediately, thereby receiving net funds of $18,000 (=$20,000-$2,000) and repaying $20,000 in a year. What is the implied rate on this loan?

a. 9.5%
b. 20%
c. 10%
d. 11.1%

Reference no: EM13268495

Questions Cloud

Determine the thickness of the oil slick : A transparent oil with index of refraction 1.15 spills on the surface of water (index of refraction 1.33), determine the thickness of the oil slick

Calculate the firms weighted average cost : Calculate the firm's weighted average cost of capital where the firm's borrowing rate on debt is 7.8%, it faces a 35% tax rate, and the common stockholders require a 20.3% rate of return.

Character of significance in the odyssey : Choose a character of significance in the Odyssey other than odysseus and explain how that person shaped his or her society and how he or she contributed to our understanding of Western civilization. How is the character a symbol of the West?

Determine the thevenin resistance for the circuit : A certain two-terminal circuit has an open-circuit voltage of 12V. When R=225 ohms is attached, the voltage across the load is 8V. Determine the Thevenin resistance for the circuit

What is the implied rate on this loan : For example, if a 1-year loan is stated as $20,000 and the interest rate is 10%, the borrower "pays" 0.10 × $20,000 = $2,000 immediately, thereby receiving net funds of $18,000 (=$20,000-$2,000) and repaying $20,000 in a year. What is the implied ..

Find the potential difference between the ends of the bar : A uniform magnetic field B is perpendicular to the plane of rotation. What is the potential difference between the ends of the bar

Find the norton equivalent current for the circuit : A somewhat discharged automotive battery has an open-curcuit voltage of 12.5 V and supplies 50 A when a 0.1 ohm resistance is connected across the battery terminals. find the thevenin equivalent voltage

Compute the wavelength of the laser light : A laser beam is incident on two slits with a separation of 0.230 mm, and a screen is placed 5.10 m from the slits. what is the wavelength of the laser light

Find the matrix representation of differentiation operation : Suppose that the voltage v(t) is then inputted to a differentiator circuit. Find the matrix representation of the differentiation operation with respect to the basis B. Verify your derivative using your knowledge from calculus.

User Account

All Pages