Caitlin draws a cash flow diagram to model the following scenario.

A 270-day commercial bill will mature for $400000. The price paid for the bill at issue was $381165.22. The bill was sold 137 days after issue for $395904.33. Calculate the annual rate of simple interest (as a percentage, to two decimal places) earned by the buyer who paid $381165.22 and sold for $395904.33. What was the annual rate of simple discount (as a percentage, to two decimal places) that the buyer sold at (earning a price of $395904.33)?

Here is the cash flow diagram Caitlin drew.

Which response best reflects the values of Z, Y, X, W, V, U, T and S?

Question 11Answer

a.Z is 270.00, Y is $400000.00, X is $381165.22, W is 137, V is $395904.33, U is not required, T is 2.81% p.a. (simple discount) and S is 10.30% p.a. (simple interest).

b.Z is 270.00, Y is $400000.00, X is $381165.22, W is 137, V is $395904.33, U is not required, T is 2.71% p.a. (simple discount) and S is 10.69% p.a. (simple interest).

c.Z is 270.00, Y is $400000.00, X is $381165.22, W is 133.00, V is $395904.33, U is not required, T is 2.73% p.a. (simple discount) and S is 10.61% p.a. (simple interest).

d.Z is 270.00, Y is $400000.00, X is $381165.22, W is 137, V is $395904.33, U is not required, T is 2.71% p.a. (simple discount) and S is 10.40% p.a. (simple interest).

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Investor S W T N Investor S W T N

Answer rating: 100% (QA)

The answer is a Z is 27000 Y is 40000000 X is 38116522 W is 137 V is 39590433 U is not requ... View the full answer