Question

Loan Amount: $13,000 Method of payment: discount basis Amount of Interest: $625 Term of loan: 1 year Effective Rate of Interest (to the nearest tenth) = _____. 4.8 5.1 20.8 57.7

Answer 1

Loan Amount: $13,000
Method of payment: discount basis
Amount of Interest: $625
Term of loan: 1 year

∴ Rate if interest = $\frac{Amount \ of \ Interest}{Loan \ Amount} *100$
$Rate = \frac{625}{13,000} *100 = \framebox {4.8 \%}$

So, the correct answer is option (1) 4.8