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In a discount interest loan, you pay the interest payment up front. For example, if...

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Finance

In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $38,000 and the interest rate is 9.00%, the borrower pays0.0900\times $38,000= $3,420 immediately, thereby receiving net funds of $34,580 and repaying $38,000 in a year.
What is the effective interest rate on this loan?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.
What is the effective annual rate on a 1-year loan with an interest rate quoted on a discount basis of 19.00%?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.

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