A bank customer is granted credit for a $2,000 loan at 10 percent to be repaid in 12 equal installments.If the loan is a discount loan,what is the monthly payment?

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In a discount loan, the interest is deducted from the principal before the loan is disbursed. The interest on a $2,000 loan at 10 percent is $200 (10% of $2,000). Thus, the customer receives $1,800 ($2,000 - $200). However, the customer repays the original loan amount, which is $2,000, in 12 equal installments. Therefore, the monthly payment is $2,000 divided by 12, which equals $166.67.

A Bank Customer Is Granted Credit for a $2,000 Loan