An accountant purchases a T-bill with a face value of $6,000 for $5,935. If the term of the T-bill is 135 days, what is the annual simple interest rate (in percent) earned by the client? Round to the nearest tenth of a percent. (Use 360 days in 1 year.)
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To find the annual simple interest rate earned by the client, we first need to calculate the interest earned on the T-bill.
Interest = Face Value - Purchase Price
Interest = $6,000 - $5,935
Interest = $65
Next, we need to calculate the daily interest rate:
Daily Interest Rate = Interest / Purchase Price
Daily Interest Rate = $65 / $5,935
Daily Interest Rate = 0.01094
Now, we need to convert the daily interest rate to an annual interest rate:
Annual Interest Rate = Daily Interest Rate * 360
Annual Interest Rate = 0.01094 * 360
Annual Interest Rate = 3.9384%
Therefore, the annual simple interest rate earned by the client is approximately 3.9%.
no
I apologize for the mistake. Let's correct the calculation:
The interest earned on the T-bill is still $65.
Next, we need to calculate the daily interest rate:
Daily Interest Rate = Interest / Purchase Price
Daily Interest Rate = $65 / $5,935
Daily Interest Rate = 0.01095
Now, we need to convert the daily interest rate to an annual interest rate:
Annual Interest Rate = Daily Interest Rate * (360 / 135)
Annual Interest Rate = 0.01095 * (360 / 135)
Annual Interest Rate = 0.0292
Finally, we convert the annual interest rate to a percentage:
Annual Interest Rate = 0.0292 * 100
Annual Interest Rate = 2.92%
Therefore, the correct annual simple interest rate earned by the client is approximately 2.9%.