# A Financial Math Question

**Question**

The amount of discount paid on a one year loan “for $K,” transacted on a discounted basis at a discount rate that is equivalent to the interest rate of the first transaction, is $236.

Find $K!

**Answer**

So, Ki = 256.

“The amount of discount paid on a one year loan “for $K,” transacted on a discounted basis at a discount rate that is equivalent to the interest rate of the first transaction, is $236″

means,

dK = 236.

That is since d = i / ( 1+ i),

(iK) / ( 1+ i ) = 236

But iK = 256 from above, so…

(256)/( 1 + i ) = 236,

1 + i = 256/236 = 1.0847,

i = 0.0847 or 8.47%

Hence K = 256/i = 256/0.0847 = $ 3022.43 ( approximately )