Kyrie Durant borrowed 5,000 from a bank and agreed to pay the loan at the end of 9 months. The bank discounted the loan and gave him 4,000 in cash. (a) what was the rate of discount? (b) what was the rate of interest? (c) what was the rate of interest for one year? Make a cash flow diagram
Kyrie Durant borrowed 5,000 from a bank and agreed to pay the loan at the end of 9 months. The bank discounted the loan and gave him 4,000 in cash. (a) what was the rate of discount? (b) what was the rate of interest? (c) what was the rate of interest for one year? Make a cash flow diagram
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Kyrie Durant borrowed 5,000 from a bank and agreed to pay the loan at the end of 9 months. The bank discounted the loan and gave him 4,000 in cash. (a) what was the rate of discount? (b) what was the rate of interest? (c) what was the rate of interest for one year? Make a cash flow diagram.
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