get 97% now and pay 100% in 6 months, so the effective rate of interest is (3/97)(12/2) = 6.19%
A loan is discounted by 3%, is due in 6 months, what is the effective rate of interest?
If I understand correctly...
The loan devided by 100 times 3 = intrest need to be paid for a year devided by 2 (6/12)+Loan = loan due in 6 months.
Loan * (3/100) = interest(1 year) * (6/12)= interest(6 months)+ Loan = Total Loan+interest due.
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