What is the effective rate of a $25,000 interest-bearing simple discount 10%, 90-day note?

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asked Feb 14, 2019 10.9k views

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Josh Knauer · Answer 1 · 2019-02-20T19:13:32+0000

The effective interest rate on a discounted note is
.. 1/(1-r) = 1/0.9 ≈ 11.11%

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The amount and time have nothing to do with it for simple interest.

What is the effective rate of a $25,000 interest-bearing simple discount 10%, 90-day note?

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