Solve the problem.
-Jane Johnson buys a $30,000 T-bill at a 5.5% discount for 26 weeks. Find the purchase price of the T-bill. (Assume 52 weeks per year.)
A)$29,175.00
B)$28,350.00
C)$29,587.50
D)$29,092.50

Question

Quizplus · Accepted Answer

The purchase price of the T-bill is the face value minus the discount. The discount is calculated as follows:Discount = Face value x Discount rate x Time to maturityDiscount = $30,000 x 5.5% x 26/52Discount = $30,000 x 0.055 x 0.5Discount = $825The purchase price is:Purchase price = Face value - DiscountPurchase price = $30,000 - $825Purchase price = $29,175

Solve the Problem. -Jane Johnson Buys a $30,000 T-Bill at a 5.5% Discount