paul and sandy moege signed a $7500 note at citizens bank. citizen charges a 5.4% discount...
paul and sandy moege signed a $7500 note at citizens bank. citizen charges a 5.4% discount rate. assume the loan is for 270 days. find the proceeds and the effective rate charged by the bank. please show work
Homework Answers
| Answer a: |
| Proceeds = Face value of note - discount |
| $7,500 - ($7,500 * 5.4%*270 /360) = $7,196.25 |
| Answer b: |
| Total interest charged by bank = $7,500 - $7,196.25 = $303.75 |
| Effective rate of interest = $303.75/$7,196.25*360/270 = 5.63% |
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