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Here are the steps to solve this problem: 1. Maturity value is $12,000 2. Bank discount is $12,000 * (9.5% * 60/360) = $190 3. Proceeds to borrower is Maturity Value - Bank Discount = $12,000 - $190 = $11,810 4. Effective rate is (Bank Discount / Proceeds) * (360/Days) = (190/11810) * (360/60) = 10% The effective rate is higher than the stated discount rate of 9.5% due to the short-term nature of the note.

Author

Elizabeth Masilo

Language

EN