Tiffany purchased a $10,000, 13-week Treasury bill that's paying 2.25%. What is the effective rate on this T-bill?

Question

A. 2.26%
B. 2.2%
C. 2.0%


D. 2.7%

Answer 1

I = Po*r*t = 10,000*(0.0225/52)*13 =
56.25 = Int. for 13 weeks.
(56.25/13) * 52 = $225 = Int./yr.

%I = (225/10,000)*100% = 2.25%

Answer 2

2.7

Answer 3

J. Ryan discounts an 80-day note for $15,000 at 12%. The bank discount is (assume ordinary interest):

$14,600

$15,400

$400

$15,000

None of these

Answer 4

for sure it is not B) 2.2 i got this wrong

Answer 5

Tiffany purchased a $10,000, 13-week Treasury bill that's paying 2.25%. What is the effective rate on this T-bill?
Answer: 2.26%
Because T-bill is a simple discount note we will use a formula for simple interest I=P x r x t (I is Interest, r is rate in decim., t is time)
I=? P= 10000 r= 0.0225( 2.25% : 2.25/100% = 0.0225)
t=0.25 (13 weeks/52 weeks)
I= 10000 x 0.0225 x 0.25=$ 56.25 ( discount)
Because T-bill is a simple discount note:
$10000 - $56.25 =$9943.75
Next: I=Prt r=I/Pt r=? P=9943.75 t=0.25 (13 weeks/52 weeks)
r= $56.25/($9943.75 x 0.25)= 56.25/2485.9375=0.022627 (or 2.26%)