SOLUTION: What annual interest rate is earned by a 16​-week ​T-bill with a maturity value of ​$2,000 that sells for ​$1,967.51​? Homework question from Hans Beauvoir

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Question 1177038: What annual interest rate is earned by a 16​-week ​T-bill with a maturity value of ​$2,000 that sells for ​$1,967.51​?


Homework question from Hans Beauvoir
Answer by greenestamps(13209) About Me  (Show Source):
You can put this solution on YOUR website!


Using 52 weeks for a year, 16 weeks is 16/52 = 4/13 of a year. Then

1967.51%28x%29%5E%284%2F13%29+=+2000
x%5E%284%2F13%29+=+2000%2F1967.51
x+=+%282000%2F1967.51%29%5E%2813%2F4%29

Evaluate using a calculator. The result will be the annual growth factor; subtract 1 and convert the remaining decimal to a percent to get the annual interest rate.