1. **State the problem:** Calculate the effective rate of a $25,000 non-interest-bearing, simple discount, 10 percent, 90-day note. 2. **Formula for simple discount note:** The discount $D$ is given by $$D = P \times r \times t$$ where $P$ is the face value, $r$ is the discount rate, and $t$ is the time in years. The proceeds received by the borrower are $$Proceeds = P - D$$. The effective interest rate $r_{eff}$ is calculated by $$r_{eff} = \frac{D}{Proceeds} \times \frac{1}{t}$$. 3. **Calculate the discount:** Given $P=25000$, $r=0.10$, $t=\frac{90}{360} = 0.25$ years, $$D = 25000 \times 0.10 \times 0.25 = 625$$. 4. **Calculate proceeds:** $$Proceeds = 25000 - 625 = 24375$$. 5. **Calculate effective rate:** $$r_{eff} = \frac{625}{24375} \times \frac{1}{0.25} = \frac{625}{24375} \times 4$$ Intermediate step with cancellation: $$r_{eff} = \frac{\cancel{625}}{39 \times \cancel{625}} \times 4 = \frac{1}{39} \times 4 = \frac{4}{39} \approx 0.1026 = 10.26\%$$. 6. **Answer for Question 6:** The effective rate is 10.26 percent, so the correct choice is 3). --- 7. **State the problem:** Compare the cost of interest between a simple discount note and a simple interest note. 8. **Explanation:** A simple discount note deducts interest upfront, so the borrower receives less than the face value but repays the full face value. A simple interest note charges interest on the principal over the period. Because the discount is taken upfront, the effective interest rate on a simple discount note is higher than the nominal rate. Therefore, interest costs more on a simple discount note than on a simple interest note. 9. **Answer for Question 7:** The statement "interest costing less than a simple interest note" is false. Hence, the correct answer is that a simple discount note results in interest costing more, not less, than a simple interest note.