Calculate the cost of discounting a $230,000 bankers’ acceptance if it is due in

Question

Calculate the cost of discounting a $230,000 bankers’ acceptance if it is due in 30 days and is sold at $227,915. Ignore bank fees. (Use a Financial calculator to arrive at the answers. Use 365 days in a year. Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Calculate the cost of discounting a $230,000 bankers’ acceptance if it is due in 30 days and is sold at $227,915. Ignore bank fees. (Use a Financial calculator to arrive at the answers. Use 365 days in a year. Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Explanation / Answer

Value of Banker's acceptance = Price * ( 1 + rate *30/365)
230000 = 227915 * ( 1 + r* 30/365)
r = 0.111302.....
m = number of compoundings = 12, t =1
Effective annual yield = ( 1 + r/m)mt-1 = 11.72%

Best of Luck. God bless

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.