The following are three one year "discount" loans that a bank might offer to the customer.
Loan A: 230,000. at a 6% discount rate
Loan B: 220,000. at a 6.25 percent discount rate
Loan C: 225,000. at a 6.5 percent discount rate
a) Determine the amount of interest the bank would make on each loan and indicate the amont of net proceeds that the bank would pay our on each loan.
b) On which loan would the customer receive the most proceeds?
c) Calculate the percent interest rate (APR) or effective cost of each loan.
Which one has the lowest cost?