A company recently issued commercial boxes which will mature in 75 days at a maturity value...

A company recently issued commercial boxes which will mature in 75 days at a maturity

value of $600,000. The issue sold for $594,000. Find the equivalent annual interest rate.

Express your result to 4 places after the decimal point.

Solutions

Expert Solution

Maturity Value =60000
PV =59400
Rate for 75 days =(Maturity Value/PV)-1 =(60000/59400)-1 =1.0101%
EAR =(1+Rate for 75 Days)^(365/75)-1 =(1+1.01011%)^(365/75)-1 =0.0501

jeff jeffy answered 2 years ago

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