A 180-day discounted loan is taken out today from a bank that charges a simple discount rate of d = 9%.The bank also uses ordinary interest in determining the value of t (time).If the amount to be paid back in 180 days is $3000,how much money is actually received today?

Question

Quizplus · Accepted Answer

The present value of the loan is $2865.00. This is calculated by dividing the amount to be paid back by the sum of 1 plus the product of the discount rate and the time. In this case, the amount to be paid back is $3000, the discount rate is 9%, and the time is 180 days. So, the present value is $3000 / (1 + 0.09 * 180/360) = $2865.00.

A 180-Day Discounted Loan Is Taken Out Today from a Bank