It's 1998 and Philips N.V. requires Lit 500 million for one year. It can borrow from Banca di Roma at a 15% interest rate. How many liras must Philips borrow to receive this amount if the loan is quoted on a discount basis?

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To receive Lit 500 million on a discount basis at a 15% interest rate, Philips must borrow Lit 588 million. The discount means the interest is deducted from the loan amount upfront, so Philips receives less than the face value. The calculation is: Face Value = Amount Needed / (1 - Discount Rate) = 500 million / (1 - 0.15) = 588.24 million, rounded to 588 million.