On July 1, 2014 Trolley & Train World borrowed money from their bank First Friendly National Bank by issuing a $25,000, 90 day, non interest bearing note. The note was discounted to 14%.
Compute the following:
1) How much money did Trolley and Train World receive?
2) What was the total amount of interest paid?
3) What is the effective 90 day interest rate on this note (round to 4 decimals)?
4) What is the approximate annual effective interest rate on this note payable?

Question

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The Answer of On July 1, 2014 Trolley & Train World borrowed money from their bank First Friendly National Bank by issuing a $25,000, 90 day, non interest bearing note. The note was discounted to 14%.
Compute the following:
1) How much money did Trolley and Train World receive?
2) What was the total amount of interest paid?
3) What is the effective 90 day interest rate on this note (round to 4 decimals)?
4) What is the approximate annual effective interest rate on this note payable?

On July 1, 2014 Trolley & Train World Borrowed Money