What are Computation of Interest?

Hello everyone! My assignment is due next monday and I haven't got a clue how to solve it. The question is about interest.
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"Interest on a loan may be paid either at maturity (ordinary interest) or in advance (discounting the loan). When interest is paid in advance, the proceeds from the loan are reduced and the effective (true) interest cost is increased."
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"When you know the principal amount, the rate and the time. The amount of interest can be calculated by using the formula:I = Prt For the above calculation, we have $4500.00 to invest (or to borrow) with a rate of 9.5% for a 6 year period of time."
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