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Assume the $12,000 Treasury bill, 7% for 15 weeks. Calculate the effective rate of interest. (Use calendar year. Round your answer to the nearest hundredth percent.)

Respuesta :

sqdancefan
A useful formula for finding the effective interest rate on discounted notes is
.. (effective rate) = r/(1 -rt)

The time period appears to be
.. t = (15 weeks)*(7 days/week)*(1 year)/(365 days) = 21/73 year ≈ 0.28767 year

Then the effective rate is
.. (effective rate) = 7%/(1 -0.07*0.28767) ≈ 7.14%

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