Suppose you borrow $1,000 for a year and the lender discounts $100 of interest at the time the loan is made (giving the borrower only $900). The interest rate on this loan is about

Question

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The interest rate is calculated based on the actual amount received by the borrower, which is $900. The interest of $100 on $900 results in an interest rate of about 11.1 percent (100/900 * 100).

Suppose You Borrow $1,000 for a Year and the Lender