Homework Answers
Total amount of interest = 10000*3/12*4.8%=120
Total Net Proceeds = Bill Amount - Total amount of
interest
= 10000 - 120=9880
Effective Rate of Interest = (Total amount of interest)/(Total
Net Proceeds*3/12)
= 120/(9880*3/12) = 0.048582996 or 4.86% (Rounded to two decimal
places)
So, the effective rate of interest is 4.86%
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