Business Mathematics Brief 12th Edition by Stanley Salzman ,Gary Clendenen, Charles Miller

Exercise 100

The following exercises apply to U.S. Treasury bills, discussed at the end of this section. (Assume 52 weeks per year for each exercise, and round to the nearest hundredth of a percent.) (See Example.)
Finding Facts About T-Bills
The owner of a construction company in Mexico is worried that the peso is going to devalue, or fall in value. As a result, he purchases $1,000,000 in U.S. T-bills in order to place cash in a safe place for a short period of time. The T-bills are at a 4, discount rate for 26 weeks. Find (a) the total purchase price, (b) the total maturity value, (c) the interest earned, and (d) the effective rate of interest.
SOLUTION


Solve following application problems. Round rate to the nearest tenth of a percent, time to the nearest day, and money to the nearest cent.
T-BILLS Nina Horn buys a $50,000 T-bill at a 5.8% discount rate for 26 weeks. Find (a) the purchase price of the T-bill, _____________ (b) the maturity value, _____________ (c) the interest earned, _____________and (d) the effective rate of interest. _____________