Your bank has agreed to grant you a discount loan with an APR of 5.25%.If you need $5,000 today,how large is the face value of the loan?

Question

Quizplus · Accepted Answer

The formula for calculating the face value of a discount loan is:
Face Value = Amount / (1 - APR * Days / 360)
In this case, we have:
Amount = $5,000
APR = 5.25%
Days = 0 (since we are assuming the loan is due today)
Plugging in these values, we get:
Face Value = $5,000 / (1 - 0.0525 * 0 / 360) = $5,277.78, which rounded to the nearest dollar is $5,277. Therefore, the correct answer is D.

Your Bank Has Agreed to Grant You a Discount Loan