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If the Banker's Discount on a loan of $10000 for 1 year at 9% is $900, what is t

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Question: If the Banker\'s Discount on a loan of $10000 for 1 year at 9% is $900, what is the effective interest rate?

Options:

  1. 8%
  2. 9%
  3. 10%
  4. 11%

Correct Answer: 9%

Solution: 

Effective Interest Rate = (Banker\'s Discount / Principal) × 100 = (900 / 10000) × 100 = 9%.

If the Banker's Discount on a loan of $10000 for 1 year at 9% is $900, what is t

Practice Questions

Q1
If the Banker's Discount on a loan of $10000 for 1 year at 9% is $900, what is the effective interest rate?
  1. 8%
  2. 9%
  3. 10%
  4. 11%

Questions & Step-by-Step Solutions

If the Banker's Discount on a loan of $10000 for 1 year at 9% is $900, what is the effective interest rate?
  • Banker's Discount – The difference between the face value of a loan and the amount of money actually received by the borrower, calculated based on the interest rate and time period.
  • Effective Interest Rate – The actual interest rate that the borrower pays after accounting for the Banker's Discount.
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