Question: Problem 8-6 Effective rate on discounted loan [LO2] Sol Pine borrows $5,000 for one year at 13 percent interest. What is the effective rate of

Problem 8-6 Effective rate on discounted loan [LO2] Sol Pine borrows

Problem 8-6 Effective rate on discounted loan [LO2] Sol Pine borrows $5,000 for one year at 13 percent interest. What is the effective rate of interest if the loan is discounted? (Use a 360-day year. Do not round intermediate calculations Input your answer as a percent rounded to 2 decimal places.) Input variables: Amount ofloan Loan term Interest rate Number of days in a year $5,000 360 days 13 percent 360 Solution and Explanation: Effective rateon a discount loan (Interest/(Principal - Interest)x (Days per year/Days loan is outstanding) Interest Effective rate on discounted loan

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