Business Math

[indianlatasha]

Assume the $13,000 Treasury bill, 1.75% for 40 weeks. Calculate the effective rate of interest. (Round your answer to nearest hundredth percent. Use calender year. Omit the "%" sign in your response.)

Effective rate of interest

This is what I tried.
13000 * 1.75% *40/52 = 1750

13000 - 1750 = 11250

1750 / 11250 * 40/50

1750/ 8654 = 0.2022223

 

[tkhunny]

You could perhaps try to explain a little about what it is you are doing.

Are you sure you can use weeks of 52? Does this fit into "Use calendar year"?

After calculating interest for 40 weeks, why did you subtract it from the original value? Is this a discount problem?

Please use parentheses to clarify intent. Remember the Order of Operations. 1750 / 11250 * 40/50 = 311.111111111 -- This is not what you intend. Also, please type more carefully. Did you mean 52?

You don't seem to have used "%" in your response. It is important to follow instructions.

Exactly what is it you are trying to do? Maybe something like this?

\(\displaystyle 13000\cdot \left(1\;+\;0.0175\cdot \frac{40}{52}\right)\;=\;13000\cdot\left(1+i\right)^{40/52}\)

 

[Denis]

...or...if you wanna "see" why:
after 40 weeks, you'll theoretically reinvest 13,175 (13,000 + interest of 175),
at same rate of 1.75%, thus getting a few pennies on the 175: this'll cause the effective rate
to be peanuts over 1.75% .... right, TK?