    TRUE INTEREST RATE ON DISCOUNTED LOAN

MOST CONSUMER BANK LOANS ARE WHAT ARE CALLED 'DISCOUNT LOANS'.
IN A LOAN OF THIS TYPE THE FINANCE CHARGE IS PREPAID.
FOR EXAMPLE, THE BANK WILL GIVE YOU A LOAN WITH FACE VALUE
EQUAL TO A STATED AMOUNT(TOTAL OF REPAYMENTS) AND WILL THEN
DEDUCT THE INTEREST CHARGES FROM THE PROCEEDS OF THE LOAN.
THUS THE CONSUMER DOES NOT GET THE FACE VALUE, BUT SOME LOWER
AMOUNT. TO MAKE MATTERS WORSE CHARGES FOR ACCIDENT & HEALTH
INSURANCE,CREDIT LIFE INSURANCE, AND OFFICIAL FEES MAY BE
REQUIRED.THIS PROGRAM COMPUTES THE PROCEEDS AND THE EFFECTIVE
INTEREST RATE IN SUCH A CASE.
THE CHARGES SUCH AS A & H ARE CONSIDERED AND TEND TO RAISE
THE EFFECTIVE RATE.

PRESS ENTER TO BEGIN? 
TOTAL REPAYMENTS OF LOAN       ? 250000
TOTAL INTEREST PREPAID         ? 12500
TOTAL A & H INSURANCE CHARGES  ? 876
TOTAL CREDIT LIFE INS. CHARGES ? 321
TOTAL OFFICIAL FEES CHARGES    ? 5678
MONTHLY LOAN PAYMENT          ? 1275
TOTAL NUMBER OF MONTHLY PMTS  ? 360

PROCEEDS OF LOAN    $230625.00
ANNUAL EFFECTIVE INT. RATE          5.26%

PRESS ENTER FOR MORE COMPUTATIONS? -1
