Question

Calculate the effective rate of interest( to the nearest hundredth

percent) of the following treasury bill. Given : 10,000 tresury, 1%

for 13 weeks. Roubd to the nearest thousandth percent

Answer 1

Okay, let's break this down step-by-step:

- Principal Amount: $10,000

- Interest Rate: 1%

- Term: 13 weeks

To calculate the effective annual interest rate, we first need to convert the interest rate to a decimal. 1% = 0.01

Next, we calculate the interest for 13 weeks:

Principal x Interest Rate x (Term in years)

$10,000 x 0.01 x (13/52) = $25

Now we calculate the effective annual interest rate using the formula:

(Interest Earned / Principal Amount) x (52 weeks / Term in weeks)

($25 / $10,000) x (52/13) = 0.010192307692307692

Rounding to the nearest thousandth of a percent, the effective annual interest rate is 1.019%.

Therefore, the effective rate of interest to the nearest hundredth percent is 1.02%.