You borrow $5,000 at a simple 15% interest rate from your friend for 18 months in order to purchase new furniture and sign on a promissory note on your borrowing. 5 months later, your friend sells the promissory note to a bank that charges a 20% discount rate (Bank discount).

I'll give it a shot.

Simple interest implies that at the end of paying off the loan in 18 months, I'll have paid back $5000*115%, which is $5750.

If I am making monthly payments over the course of the loan, in 5 months, I'll have paid back $5750/18= $319.444...*5=$1597.222...

I plan to pay the rest, $5750-$1597.222=$4152.777... to the bank.

After taking 20%, they pay my friend 80% of that, so she gets $4152.777...*80%=$3322.222...

How's that?