Asked by mary
Suppose you are looking to buy a $5000 face value 26-week T-bill. If you want to
earn at least 1% interest, what is the most you should pay for the T-bill?
earn at least 1% interest, what is the most you should pay for the T-bill?
Answers
Answered by
drwls
It will be worth $5000 in 1/2 year. That is 1.005 times what it is worth now, assuming 1% annual interest. You should pay no more than X, where
1.005 X = 5000.
X = $4975.12
1.005 X = 5000.
X = $4975.12