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3 May, 21:05

Loan amount: 13000

Method of payment:discount basis

Amount of interest: 625

Term of load: 1 year

Effective rate of interest (to the nearest tenth)

+5
Answers (1)
  1. 3 May, 22:49
    0
    5.1%

    Step-by-step explanation:

    The proceeds of the loan are ...

    13000 - 625 = 12375

    The amount repaid is 13000. That amount is ...

    13000/12375 = 1.05050505 ...

    times the proceeds. So, the effective interest rate is ...

    1.05051 - 1 = 5.051% ≈ 5.1%
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