Suppose a customer is offered a loan at a discount rate of 8 percent and pays $75
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Suppose a customer is offered a loan at a discount rate of 8 percent and pays $75 in interest at the beginning of the term of the loan. What net amount of credit did this customer receive? Suppose you are told that the effective rate on this loan is 12 percent. What is the average loan amount the customer has available during the year?
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...
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The amount of net credit received by the customer ...View the full answer
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Related Book For 
Bank Management and Financial Services
ISBN: 978-0078034671
9th edition
Authors: Peter Rose, Sylvia Hudgins
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