Dallas Pierce wants to know what rate she is paying on her simple discount note. The...

Dallas Pierce wants to know what rate she is paying on her simple discount note. The maturity value was $8,801 with $81.20 interest for 77 days. What was her rate? (Use 360 days a year. Do not round intermediate calculation. Round your answer to the nearest tenth percent.)

Solutions

Expert Solution

Maturity Value is = $8,801

Interest Value is = $81.20

Therefore, Principle Amount is = $8,801 - $81.20 = $8719.80

Number of Days is = 77 days

Holding period rate is = $81.20 / $8719.80 * 100 = 0.93%

Therefore, The Annual Rate is = Holding period return / Holding period * Annual Period

= 0.93 / 77 * 360 = 4.40% per annum.

jeff jeffy answered 2 years ago

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