What is the simple annualised interest rate on a company transaction to raise $100 000 financing by drawing a bank bill with a face value of $104 000,payable in 120 days?
A) 4%
B) 12%
C) 12.17%
D) 12.67%

Question

Quizplus · Accepted Answer

To calculate the simple annualised interest rate, we can use the formula:

Simple interest rate = Face value - Purchase price / Purchase price x 365 / Number of days

Here, the purchase price is $100,000 and the face value is $104,000. The number of days is 120.

Therefore, the simple interest rate = (104,000 - 100,000) / 100,000 x 365 / 120 = 0.1217 or 12.17%.

So, the correct answer is C) 12.17%.

What Is the Simple Annualised Interest Rate on a Company