Question

An accountant purchase of the T-bill with a face value of $6000 for 5945 Dollars if the term of the T-bill is 125 days What is the annual simple interest rate in percent earned by the client round to the nearest 10th of a percent use 360

Answer 1

Answer:

2.6%

Explanation:

We'll use the below formula to determine the interest rate;

$Interest\text{ rate }=\frac{(face\text{ value - initial purchase prise)}}{\text{face value}}\cdot\frac{360}{days\text{ of maturity}}$

We're given the below parameters in the question;

*Initial purchase price = $5945

*Face value (future value) = $6000

*Days of maturity = 125

Let's now substitute the above values into our formula and solve for the Interest rate as seen below;

$\begin{gathered} \text{Interest rate }=\frac{(6000-5945)}{6000}\cdot\frac{360}{125} \\ =\frac{55}{6000}\cdot\frac{360}{125} \\ =0.00916666667\cdot2.88 \\ =0.0264 \\ =2.6\text{\%} \end{gathered}$