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Math Help - last of apps of simple interest

  1. #1
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    last of apps of simple interest

    Jake purchased a $100,000 182 day T-bill discounted to yield 5.5%. When he sold it 30 days later, yields had dropped to 5.0 % . How much did jake earn?

    100,000
    |____________________________________________|
    __________5.5%___________| _ _ _ _5% _ _ _ _ _ _ _ _ 182 days_
    30 days


    FV =
    P = 100,000
    r = 0.055
    t = 182 / 365 ? = 2742.47


    first off , did i get the time line right ?

    2nd; for T, what happens to T when the 30th day hits and beyond?

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  2. #2
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    Quote Originally Posted by diehardmath4 View Post
    Jake purchased a $100,000 182 day T-bill discounted to yield 5.5%.
    When he sold it 30 days later, yields had dropped to 5.0 % .
    How much did jake earn?
    PURCHASE:
    a = 182(.055) / 365
    purchase price = 100000 / (1 + a) = $97,330.74

    SALE:
    b = 152(.05) / 365
    sale price = 100000 / (1 + b) = $97,960.28

    Good Ole Jake earned the difference.....kapish?
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