270-Day Commercial Paper with a face value of $500,000 was sold 206 days after it was issued at a price that would provide a simple rate of interest to the purchaser of 9.85%. What was the price?
A) $473,668
B) $508,636
C) $491,511
D) $527,796
E) $490,929

Question

Quizplus · Accepted Answer

The price of the commercial paper can be calculated using the formula for simple interest: Price = Face Value / (1 + (Rate * (Days to Maturity / 360))). Substituting the given values: Price = $500,000 / (1 + (0.0985 * (64/360))) = $491,511.

270-Day Commercial Paper with a Face Value of $500,000 Was