Final answer:
The annual rate of interest on a discounted loan of $7,600 at 11% nominal interest is approximately 12.36%. To calculate this, the interest ($836) is divided by the actual received amount ($6,764), and this ratio is multiplied by 100 to get the percentage.
Step-by-step explanation:
When a loan is discounted, the interest is deducted from the principal before the money is disbursed to the borrower. The question asks for the calculation of the annual rate of interest for a loan amount of $7,600 borrowed for one year at a nominal interest rate of 11% with discounting.
To find the annual rate of interest on a discounted loan, we must determine the amount of interest paid and then calculate it as a percentage of the actual money received. The amount of interest that Dr.Paikiller will pay is calculated as $7,600 × 11%, which is $836.
Since the loan is discounted, Dr.Paikiller will actually receive $7,600 - $836 = $6,764 up front.
Thus, the effective rate of interest (annual rate of interest) is the interest paid divided by the actual loan amount received multiplied by 100 to get the percentage. So, the effective rate is ($836 / $6,764) × 100, which is approximately 12.36%.
This is the annual rate of interest on the discounted loan, which is different from the nominal rate of 11%.