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On September 1, 2018, Hiker Shoes issued a $102,000, 8-month, noninterest-bearing note. The loan was made by Second Commercial Bank where the stated discount rate is 11%. Hiker's effective interest rate
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On September 1, 2018, Hiker Shoes issued a $102,000, 8-month, noninterest-bearing note. The loan was made by Second Commercial Bank where the stated discount rate is 11%. Hiker's effective interest rate on this loan (rounded) is: a. 11.8%b. 11.87%c. 11.00%d. 11.79%

User Allenhwkim
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Answer:

b. 11.87%

Step-by-step explanation:

interest = $102,000*11%*8/12

= $7480

Effective interest rate = ($7480/($102000 - $7480))*12/8

= ($7480/94520)*12/8

= 11.87%

User Seth Carnegie
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