Question

jeff rakhnovich buys a 500000 t-bill at 2.5% discount for 36 weeks find the effective interest rate of APR assume 52 weeks per year

Answer 1

This is solved as follows: $500,000* ((.025 * 36/52)+ 1)^-1 = $491,493.38 The effective interest APR is simply the bracketed term above which when evaluated will yield %1.73.