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Question

Solve the application problems. Round rate to the nearest tenth of a percent, time to the nearest day, and money to the nearest cent.

Tim Garcia has a poor credit history partly due to a divorce. A finance company finally agrees to lend him funds based on a note with a face value of $9400, but it requires him to use his truck as collateral. Even then, the bank charges him a high 16% discount rate. Find (a) the proceeds and (b) the effective rate if the note is for 7 months.

Solution

VerifiedAnswered 2 years ago

Answered 2 years ago

Step 1

1 of 13Start by identifying the given values.

Face value $=\$9,400$

Term of Loan $=7$ months

Discount rate $=16\%$

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