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Find the equivalent rate of interest for a discount rate of 7.5% for 60 days.

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1 Answer

Barbara,
 
if the 7.5% is the annual interest rate, then the formula would be the following to find the equivalent rate of interest rate for 60 days:
 
((0.075 + 1)^(1/(60/360)) - 1) * (60/360) = approx. 7.28%
 
This is because the 7.28% interest rate is for 60 days, and is compounded six times a year (assuming a 360-day year) to yield 7.5% annually.
 
-John