Answer to Question #163150 in Quantitative Methods for saleemaslam

Question

On May 28, 2020, Amy purchased a Government of Canada T-bill that matures on August 4, 2020. How much did Amy pay for the investment if $10,000 will be received on August 4, 2020 and the rate of simple interest is 1.35%? ________

 need it soon

Answer 1

Answer:

Future value is $10,000

Rate of interest 1.35%

The final amount is $10,000

Rate of interest is 1.35%

Initial time is 28 May 2020

Maturity date is 4 August 2020

So, the total number of days of maturity are 68. That is subtracting initial time from maturity date.

Maturity period will therefore be 68.

Present value of investment is given by;

$10000 \over 1+0.0135X {68 \over 365}$ = $10000 X 365 \over 365+0.918$ = $9974.912

So, Amy pay is  $9974.91.