Arman will pay back a P450,000 loan at the end of 26 months. This loan has an annual simple discount rate of 7%. How much money does Arman actually receive from the bank? A. P68,250 B. P381,750 C. P518,250 D. P581,750

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.