Question

how to solve You just received a loan from your banker to buy seed and plant your alfalfa field. The loan is a discount loan and is for $5,000 for 1 year and the quoted rate was 10%. What is your APR

Answer 1

11.11%

Step-by-step explanation:

For computing the annual percentage rate (APR) we need to apply the RATE formula i.e to be shown in the attachment below.

Given that,

Present value = $5,000 × (100 - 10%) = $5,000 × 90% = $4,500

Future value or Face value = $5,000

PMT = 0

NPER = 1

The formula is shown below:

= -Rate(NPER;PMT;-PV;FV;type)

The present value come in negative

So, after applying the formula, the APR is 11.11%