Discount rate and interest rate?
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I have searched on google but it doesnt give a clear explanation. can you please explain in a simple way i can understand ? thank you! what is a discount rate? is it the "interest rate" that the borrower has to pay the interest beforehand? How is it different from the interest rate? Also, if discount rate and interest rate are different, why the rate of interest and discount still are equivalent? 1+i = 1/(1-d)?
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Answer:
intrest rate in my thinking is the rate between the purchasing rate and sold rate forexample u purchased a mobile set 100$ and sold it 120$ so the 20$ is interest rate Discount rate mean u give some when 5% discont from 200$ it is 10$ like tht u can calculate it (200 multiply by 5) and then divided by 100 which is eqaul to 10 i hope u know it now if plz forgive if u not understand me
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Other answers
Discount rate is the rate that a central bank charges member banks when they borrow short term money. In this case, the interest rate is the discount rate.
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