ICICI Bank offers a 1-Year Loan to a company at an interest rate of 20 percent payable at maturity, while Citibank offers on a discount basis at a 19% interest rate for the same period. How much should ICICI Bank decrease/increase the interest rate to match up the effective interest rate of Citibank?
1 Increase by 3.5%
2 Decrease by 1.8%
3 Increase by 1%
4 Decrease by 1.4%
I really appreciate you taking time in explaining how it works however is there an easier way to help me understand i am actually not very good at maths and this questions was asked in one of the entrance test for MBA (Masters in Business administration) by one of management institutes. Though the answer you gave was correct as per the solved answer sheet for this entrance exams but i am still not very clear as to how you reached to that conclusion. Is this question suppose to be related to increase% / decrease percent and discounts?