Answer to Question #192438 in Financial Math for Beauty Magadlela

Question

If a simple interest rate of 24% per year, is equivalent to a simple dis ount rate of 20,5% per year, then the time under onsideration is approximately

[1] 854 days.

[2]711 days.

[3] 312 days.

[4] 260 days.

[5] 304 days

Answer 1

One full period the discount rate and interest rate would be equal.

$0.24x=0.205 \\ x = \frac{0.205}{0.24} = 0.8541$

x=0.8541

Then there are 365 days in the year.

$n = 365 \times 0.8541 = 311.8$

n = 311.8 = 312 days

Answer: [3] 312 days.