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

Question

would i use the formula r= d/1-dn? which would be .075/1-.075(60/360) = .0625 or 6.25%

8/31/2013 | Barbara from Sumter, SC

Answer 1

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would i use the formula r= d/1-dn? which would be .075/1-.075(60/360) = .0625 or 6.25%

8/31/2013 | Barbara from Sumter, SC

Answer 2

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Answer 3

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

11/27/2013 | John H.