(PLEASE I NEED HELP WITH BUSINESS PRECALCULUS I COULDNT FIND THE ANSWER) 13. Com
ID: 2646632 • Letter: #
Question
(PLEASE I NEED HELP WITH BUSINESS PRECALCULUS I COULDNT FIND THE ANSWER)
13. Compute the specified quantity.
At auction, 9-month T-bills were sold at a discount of 7.425%. What was the simple annual yield r? HINT [See Example 5.] (Round your answer to three decimal places.)
r = %
7.Compute the specified quantity.
Layaway plans allow you, for a fee, to pay for an item over a period of time and then receive the item when you finish paying for it. In November 2011, Senator Charles E. Schumer of New York warned that the holiday layaway programs recently reinstated by several popular retailers were, when you took the fees into account, charging interest at a rate significantly higher than the highest credit card rates.
Explanation / Answer
(1) Computation of simple annual yield of the bond.We have,
Assume par value of bond = $ 1,000
Purchase price = 1,000 - ( 1,000 x 7.425 % ) = $ 925.75
Simple annual yield of the bond = ( Future Value / Purchase price)1/n - 1
Simple annual yield of the bond = ( 1,000 / 925.75)12/9 - 1 = 1.110577 - 1 = 0.11058 * 100 = 11.058 %
Hence, the simple annual yield of the bond is 11.058%.
(2) Computation of simple interest rate r would you be paying for this layaway plan.We have,
Simple interest rate (r) = 4 / 84 * 100 = 4.762%
Hence, the simple intererest rate is 4.762 %.
(3) Computation of annual percenage return of Apple company if it is purchased in February and sell in August.We have,
The return for 6 month = ((260.09 - 195.46 ) / 195.46) 6/12* 100 = 16.533 %
Annualised return = 16.533 x 2 = 33.066 %
Hence, annualised percentage return of Apple company stock is 33.066%.
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