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

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

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John H. | BYU MBA Tutor with CPA BackgroundBYU MBA Tutor with CPA Background
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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