Suppose the lender does not refer to an annual interest rate and does not refer to the amount you borrow. You sign a legal instrument (probably a promissory note) that calls for the payment of $106,000 at the maturity date of the loan (one year later). The bank puts $100,000 in your checking account today. Is the annual interest rate on this loan still 6 percent?
Suppose your company borrows $500,000 from a bank, and that amount is deposited in your checking account today. The note that you sign calls for a 6.25 percent annual interest rate. Determine the maturity value (the amount you will pay the bank when the note comes due then) of the note one year from now.