Discount interest refers to a loan where the interest on the loan is deducted from the loan up front. This means that the borrower only receives a loan that is net of the interest payment. For example, if a one-year $1,000 loan has $100 of interest expense associated with it, the borrower will only receive $900. In effect, the borrower has obtained a $900 loan and will then repay just the principal portion of the loan.
| Mature Value | Discount |
|---|---|
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