Accounting/math

Question

Eugene signed a 10,000 note at Castle Bank. he bank charges a 7% discount rate. Suppose the loan is for 150 days . Use ordinary interest to find, The proceeds, The effective rate charged by the bank, rounded to the nearest tenth percent

Answer 1

To calculate the effective interest rate (charged by the bank) you would take the interest payment (7% discount rate * 10,000 face value of note) and divide it by the discounted carrying value of the note, $9,712.33 ($10,000 * 7% *(150/365))

Answer 2

Helen

take 7% of the 10,000 note and divide the answer into 365 and mulitply by 150. subtract that from the 10,000 and that should be the answer.