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If the Banker's Discount on a sum of $2500 for 1 year at 6% is $150, what is the

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Question: If the Banker\'s Discount on a sum of $2500 for 1 year at 6% is $150, what is the effective interest rate?

Options:

  1. 6%
  2. 7%
  3. 8%
  4. 9%

Correct Answer: 6%

Solution: 

Effective Interest Rate = (Banker\'s Discount / Principal) × 100 = (150 / 2500) × 100 = 6%.

If the Banker's Discount on a sum of $2500 for 1 year at 6% is $150, what is the

Practice Questions

Q1
If the Banker's Discount on a sum of $2500 for 1 year at 6% is $150, what is the effective interest rate?
  1. 6%
  2. 7%
  3. 8%
  4. 9%

Questions & Step-by-Step Solutions

If the Banker's Discount on a sum of $2500 for 1 year at 6% is $150, what is the effective interest rate?
  • Banker's Discount – The difference between the nominal value of a loan and the amount actually received by the borrower, calculated based on the interest rate and time period.
  • Effective Interest Rate – The actual interest rate that a borrower pays after accounting for the Banker's Discount.
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