1. A Discount Loan is Paid:
As soon as possible
At the beginning of the year
Semi annually
At The end of the year
2. You are going to borrow $40,000 for one year, paying interest of $2,400 at the beginning of the year. The bank will require you to keep 10% of the borrowed funds in a non-interest bearing account at the bank during the life of the loan. What is the EFFECTIVE ANNUAL INTEREST RATE?
.5%
7.143%
8.43%
10%